Key points of investment
Performance summary: 2024Q1, the company achieved revenue of 23.74 billion yuan, -23.4% year on year; realized net profit of 266 million yuan, +5.1% year over year; realized net profit without deduction of 231 million yuan, +4.85% year over year. The company's performance improved significantly month-on-month. 2024Q1's net profit to mother was +98% month-on-month, after deducting non-net profit +79% month-on-month, reflecting a significant improvement in operating fundamentals.
The company's business structure continues to improve, and the industrial chain business is growing rapidly: the company's business is mainly divided into two major sectors: supply chain and industrial chain. The supply chain sector has high revenue, but the barriers are low and profit margins are low; the revenue of the supply chain sector is low, but it has certain barriers and high profit margins. In 2023, the company's industrial chain/supply chain sector accounted for 25%/75% of revenue and 63%/37% of total profit. 2024Q1's revenue declined but profits increased, reflecting pressure on the supply chain business, but the industrial chain business achieved considerable growth. In the future, the supply chain business is expected to recover as effective demand for commodities recovers; the industrial chain sector may gradually become the company's growth engine.
The industrial chain sector is growing strongly: According to the company's 2023 annual report, ① clean energy business, in 2023, the company won bids for key projects such as 137MW Calatrava and 550MW Lasso photovoltaic power station EPC; new international photovoltaic engineering orders of US$470 million were signed, an increase of 200% over the previous year, and is expected to contribute to future growth. ② The shipbuilding business ordered 66 ships at the end of 2023, and the order is scheduled until the end of 2026; the company actively optimized production to release production capacity, and the number of ships delivered in 2023 reached a new high of nearly 5 years. ③ The large consumer textile sector grasped the “national trend” consumer trend and continued to deepen cooperation with brands such as Anta, Li Ning, and Semma, with a total profit of +28% in 2023. Looking at new projects/new orders, the overall growth potential of the industrial chain sector is strong, and it is expected that it will continue to release incremental growth.
Sumeda is a state-owned enterprise with an undervalued, high dividend+growth potential: ① On the dividend side, the dividend rate from 2020 to 23 was over 40%. Of these, the 2023 annual report plans to pay a dividend of 430 million yuan, with a dividend rate of 42%. The dividend rate corresponding to the closing price on April 25 is 4%. ② On the governance side, the company is a benchmark for central enterprise reform with shareholding incentives for employees in the field of commerce and trade. Sumeda has a trade union shareholding system. Key employees hold 65% of the shares in each of its business subsidiaries through trade unions, which helps stimulate internal vitality and promote the company's long-term development.
Profit forecast and investment rating: We maintain the company's net profit forecast for 2024-26 at 11.1/11.7/ 1.23 billion yuan, with a year-on-year growth rate of 7.5%/5.7%/5.0%, corresponding to the April 25 valuation of 10/9/9 times P/E, maintaining the “increase” rating.
Risk warning: commodity price fluctuations, macroeconomic cycles, exchange rate fluctuations, shipbuilding business delivery cycles, etc.