Incident: The company released its 2023 annual report and 2024 quarterly report. In 2023, the company achieved revenue of 1.38 billion yuan, +2.0% year on year, net profit to mother of 84.82 million yuan, +15.0% year on year; 2024Q1 achieved revenue of 270 million yuan, +29.5% year over year, and net profit to mother of 12.89 million yuan, +483.0% year on year.
Domestic business gross margins have been restored, and overseas gross margins have remained high. The company's gross profit margin and net profit margin reached 28.7% and 6.5% respectively in 2023, up 1.6 pct and 0.7 pct year on year; of these, the overseas business achieved revenue of 563 million yuan, accounting for 40.8% of the company's annual revenue, with a gross margin of 34.0%, up 1.6 pcts year on year, 9.2pct higher than domestic business; domestic business gross margin reached 24.9%, up 2.1 pct year on year, and the repair situation is good. We believe that with the continuous growth of the company's overseas orders, the overall gross margin level is expected to increase further.
Orders remained strong, and 24Q1 contract liabilities and inventories all reached record highs. In terms of orders, as of December 31, 2023, the company held orders of 3.623 billion yuan, an increase of 43.1% over the same period in 2022. Furthermore, the 24Q1 company's contract liabilities and inventory reached the highest levels in history, at 1.57 billion yuan and 1.58 billion yuan respectively, up 66.8% and 35.2% from 23H1 (current orders of 3.59 billion yuan).
Liquid cooling solutions in data centers are gradually becoming popular, and there is plenty of room for imagination in cooling towers. Liquid cooling technology is divided into two types: contact and contactless. Contact liquid cooling directly contacts the cooling liquid with the heating device, including specific solutions such as immersion and spray liquid cooling. Non-contact liquid cooling means that the cooling liquid does not come into direct contact with the heating device, including specific solutions such as cold plates. Whether using contact or contactless liquid cooling, a cooling tower must be equipped to ensure the stable operation of the system.
We believe that with the rapid growth in data center construction and the continuous increase in the share of liquid cooling solutions, the data center cooling tower market will explode. As a leading domestic cooling tower enterprise, the company is expected to break the foreign monopoly situation of data center cooling towers and help replace domestic ones.
Investment advice and valuation: The company's revenue from 2024 to 2026 is expected to be 1,986 billion yuan, 3,060 billion yuan and 3.154 billion yuan respectively, with revenue growth rates reaching 43.9%, 54.0% and 3.1% respectively, net profit to mother of 140 million yuan, 255 million yuan, and 255 million yuan respectively. Net profit growth rates will reach 65.2%, 78.8% and 1.5% respectively, maintaining the “increase” investment rating.
Risk warning: Overseas sales revenue accounts for a relatively high risk, downstream demand falls short of expectations, and industry competition increases risk