Incidents:
On April 15, 2024, the company released its 2023 annual report. In 2023, the company achieved revenue of 4.2 billion yuan, +27% year over year; net profit to mother was 982 million yuan, +48% year over year. Among them, 2023Q4 had single quarter revenue of 1,328 million yuan, +44% year over year; net profit to mother of 314 million yuan, +61.2% year over year.
Opinions:
The company's product channel advantages are remarkable, the intelligent electricity distribution business is growing rapidly, and the new energy business is growing rapidly. By business, the smart electricity use/smart power distribution/new energy business achieved revenue of 3,595 million yuan/406 million yuan/163 million yuan respectively, +23.93%/+24.19%/+283.50% year-on-year respectively. Among them, the smart electricity business benefited from a significant increase in revenue share of system software and solutions; the intelligent power distribution business achieved the winning and delivery of distribution network collection projects in the African market and the first bid for China Southern Power Grid's collection project; in Africa and Latin America, the company won bids for EPC projects such as microgrids and integrated energy management, and domestically, the company won the bid for 10-million-level charging station EPC projects.
The share of overseas markets increased rapidly, and sales in Africa and Europe increased dramatically. By region, the company achieved overseas and domestic revenue of 2,791 billion yuan/1,372 billion yuan respectively in 2023, +51.29%/-3.71% year-on-year respectively. Overseas revenue accounted for 66.46%, an increase of 10.71 percentage points over the previous year. Among them, the company achieved revenue of 1.03 billion yuan, +157% year over year; achieved revenue of 872 million yuan in Asia, +32% year over year; achieved revenue of 799 million yuan in Latin America, +3.5% year over year; and achieved revenue of 118 million yuan, +436% year over year in Europe.
Looking ahead, the company's export momentum is expected to continue as overseas demand for intelligence and upgrading increases.
Profitability continues to improve, and cost control has achieved remarkable results. In 2023, the company's profitability improved markedly, with a gross profit margin of 41.90%, up 3.67 percentage points from the previous year, a 6-year high; the net profit margin was 23.39%, up 3.33 percentage points from the previous year, a record high of nearly 7 years.
The increase in profits is mainly due to factors such as falling raw material prices, depreciation of RMB, and increased share of solutions. At the same time, the company's expense ratio during 2023 was 13.64%, down 2.98 percentage points from the previous year, and the cost control results were remarkable.
Profit forecast and investment rating: The company is a leading enterprise with intelligent electricity distribution overseas. It has deep first-mover advantages and channel barriers, and is expected to benefit from growing demand at home and abroad. The company's net profit due to mother in 2024-2026 is estimated to be 1,08/1,464/1,717 billion yuan, respectively, and the corresponding 2024-2026 PE is 19.9/16.5/14.0 times, respectively. First coverage, giving a “buy” rating.
Risk warning: risk of changes in industry policy; risk of power grid investment and tendering falling short of expectations; risk of overseas channel construction falling short of expectations; risk of export policy risk; risk of raw material price fluctuations; risk of confirming revenue falling short of expectations; risk of force majeure factors.