Core views:

Libert published its 2023 annual report. In 2023, the company achieved revenue of 3.42 billion yuan, +88.4% year over year; net profit to mother of 190 million yuan, +38.7% year over year; 24Q1, revenue of 658 million yuan, +14.2% year over year; net profit to mother of 39 million yuan, 14.23% year on year, performance in line with expectations.

Revenue from the engineering and module business increased sharply, and overseas gross margin increased dramatically. By business, ① engineering services: 23 billion yuan in revenue, +106.7% year on year, gross profit margin 12.29%, year-on-year -7.08pct; ② Industrial module design and manufacturing: 23-year revenue of 495 million yuan, +27.5% year on year, gross profit margin of 26.04%, +5.94 pct year on year. By region, ① domestic: revenue of 2,973 billion yuan in year 23, gross profit margin of 13.16%, year-on-year -6.52pct; ② overseas: 23-year revenue of 261 million yuan, +38.7% year on year, gross profit margin of 28.40%, +10.03pct year on year.

It is proposed to issue convertible bonds to speed up the construction of the Nantong Libert Heavy Industry Project. On January 16, the company announced a convertible bond issuance plan. The total capital raised will not exceed RMB 750 million to build the Nantong Libert Heavy Industry Project. The total investment of the project is about 1,295 billion yuan. It mainly manufactures and manufactures large-scale modules used in nuclear power engineering, petrochemicals, pharmaceutical electronics, marine engineering, mining machinery and other industries.

Recent orders have been placed intensively, supporting the continued rapid growth of the company's future revenue and performance. According to the company's official account, on January 14, 2024, the company signed 2 general contracting contracts with Zhejiang Tuoen Optical New Materials Co., Ltd., with a total contract value of about 650 million yuan. In addition, the company recently won bids for various projects such as Lianhua Linde, Sinochem Blue Sky Honeywell, Covestro, Shadoma, UOP, Zhangjiagang Wacker, Quaker Chemical, Maoming Liquid & Air, and Meishan Yabao.

The three-year shareholder return plan locks in the dividend ratio. According to the three-year shareholder return plan announced on January 16, the distributed profit for 23-25 is not less than 10% of the current year's distributable profit, and the 3-year cumulative cash dividend is not less than 30% of the annual distributable profit. In '23, the company's cash dividend accounted for 10.0% of net profit attributable to mother.

Profit forecasting and investment advice. The company's net profit for 24-26 is estimated to be RMB2.40/3.02/376 million yuan. Referring to comparable company valuations and the company's future growth rate, the company was given 20 times PE in 24 years, corresponding to a reasonable value of 10.70 yuan/share, maintaining a “buy” rating.

Risk warning: downstream demand is slowing; construction of the Nantong project falls short of expectations; insufficient financial strength