Incident: On April 26, 2024, the company released its 2023 annual report and 2024 quarterly report: achieved operating income of 1,685 billion yuan, a year-on-year increase of 3.22%; realized net profit of -88 million yuan, a year-on-year decrease of 142.94%; realized deducted non-net profit of 117 million yuan, a year-on-year decrease of 338.73%. The losses were due to falling product prices, insufficient phased market demand, low grid power generation of participating wind farms, increased depreciation and amortization after construction and consolidation of the new base, and accounts receivable and contract assets accounts Due to aging, impairment provisions have been calculated accordingly for assets relating to credit impairment losses and signs of asset impairment losses, with a cumulative total of $183.572 million in impairment throughout the year.
Looking at a single quarter, the company achieved revenue of 131 million yuan in 2023Q4, a year-on-year decrease of 71.73%; realized net profit to mother - 153 million yuan, a year-on-year decrease of 330.02%. 2024Q1 achieved operating income of 124 million yuan, a year-on-year decrease of 75.22%; realized net profit of 74 million yuan, a year-on-year decrease of 10.28%; realized deducted non-net profit of 73 million yuan, an increase of 5.60% year-on-year, mainly due to a decrease in revenue due to delayed delivery orders.
In terms of profit level, we achieved gross profit margin of 9.77% in '23, -4.98pcts year on year; net profit margin -5.13%, -18.12pcts year on year. 24Q1 achieved gross profit margin of 5.05%, -10.43pcts year over year; net profit margin 58.74%, +42.24pcts year over year.
By product: 1) Pile foundation: achieved revenue of 1,105 billion yuan in 23, accounting for 65.56% of revenue; 2) Wind power towers: achieved revenue of 394 million yuan in 23 years, an increase of 16.78% over the previous year, accounting for 23.36% of revenue; 3) Conduit frame: Received orders for conduit racks one after another in 23 years, achieving revenue of 129 million yuan, an increase of 100% over the previous year, accounting for 7.63% of revenue.
Production capacity has been expanded smoothly, and the Sea Breeze layout continues to improve. According to the 2023 annual report, the company currently has multiple production bases such as Haili Offshore, Haili Equipment, and Haiheng Equipment; Haili Wind Energy Base, Shandong Dongying Base, and Weihai Rushan Base have completed infrastructure construction at the end of 2023 and are expected to be put into production in 2024; at the same time, the first phase of the Jiangsu Qidong base is also expected to be put into operation in 2024; in addition, Jiangsu Binhai base, Zhejiang Wenzhou base, and Guangdong Zhanjiang base are also under planning and construction.
Investment advice: We expect the company's 2024-2026 revenue to be 30.6/48.9/5.44 billion yuan, respectively, with a growth rate of 82%/60%/11%; net profit to mother will be 50/ 79/ 9.3 billion yuan, respectively, with a growth rate of 668%/58%/18%, corresponding to PE 19x/12x/10x for 24-26. Considering the recovery in industry demand and the company's considerable profit flexibility, the “recommended” rating was maintained.
Risk warning: downstream development falls short of expectations; market development falls short of expectations; raw material prices continue to be high.