Incident: The company released its quarterly report for 2014. In 24Q1, it achieved operating income of 23.74 billion yuan, a year-on-year decrease of 23.4%, net profit to mother of 270 million yuan, an increase of 5.1% year-on-year, after deducting non-return net profit of 230 million yuan, an increase of 4.9% over the previous year. Revenue pressure is expected to be mainly affected by high demand.
Profitability continues to increase. The company's 24Q1 gross margin was 6.1%, an increase of 1.5pp, which is expected to be mainly due to the optimization of the business structure; the cost ratio for the period was 2.9%, with the same increase of 0.6pp, with sales/management/finance/R&D expense ratios of 1.5%/0.9%/0.02%/0.5%, respectively, +0.4pp/+0.2pp/-0.1pp/+0.1pp compared to the same period. Under the combined influence, the net interest rate due to mother in 24Q1 was 1.1%, an increase of 0.3 pp over the same period.
Operating cash flow is under pressure. According to the company's financial report, the net operating cash flow outflow for 24Q1 was 2.32 billion yuan, and the net outflow for 23Q1 was 1.03 billion yuan. The increase in net outflow is expected to be mainly due to the company preparing large quantities of goods according to market conditions, and inventories increased by about 4.1 billion yuan compared to the end of 23.
There are plenty of orders for the shipping business. According to Sumeda Shipping's official account, as of April 3, '24, the Crown 63 3.0 version was on hand; on April 23, the company and Huaguang Shipping signed 2 new Crown 63 PLUS shipbuilding contracts. At the same time, the two sides will cooperate to upgrade the ship models and strive to reach the EEDI stage 4 level of energy consumption, and the shipping business is expected to rise to the next level.
In collaboration with brother companies, the platform's empowering advantages are prominent. According to the official account of Sumeda Co., Ltd., the company signed a steel material distribution project with China Machinery Construction under China Machinery Group, the controlling shareholder, to help the target Dongguan Qingtian high-performance environmentally friendly coating project (the project is an internal enterprise of China Machinery Group from the owner and construction party to the steel supplier). In the future, the company is expected to strengthen deep collaboration with brother companies and continue to be empowered by the China Machinery Group platform.
Profit forecast and investment advice: Net profit due to mother is estimated to be $1.11 billion, 12.3 billion yuan and 1.35 billion yuan respectively for 24-26, with year-on-year growth rates of 8.1%, 10.4%, and 10.2%, respectively. Considering that the influence of the company's own brands in various segments continues to increase, development continues to be specialized, and performance is expected to be catalyzed by the Belt and Road Initiative, maintaining a reasonable value of 9.29 yuan/share and maintaining a “buy” rating.
Risk warning. Demand for commodities fluctuates, market competition is fierce, and overseas markets and exchange rates fluctuate.