Event Overview: The company released its 2024 quarterly report: achieved operating income of 10.288 billion yuan, +2.74% year over year; realized net profit of 636 million yuan, +3.08% year over year; net profit after deducting non-return to mother was 654 million yuan, +12.35% year over year. We judge that the 24Q1 net profit growth rate still achieved double-digit growth on a basis affected by exchange losses. We believe that the performance is in line with market expectations.
Overseas orders continued to be impressive, with operating orders +43% year-on-year. The company signed new orders of 212 billion yuan in 24Q1, compared with -2% (higher base for 23Q1 orders); among them, engineering technology services/high-end equipment manufacturing/production and operation services each signed new orders of 146/17/4.5 billion yuan, -12%/+2%/+43%; by the end of 24Q1, the company had not completed a contract amount of 55.4 billion yuan, 5.4 times the revenue for the same period, and the order coverage rate was high. Overseas orders were +70% year-on-year, and overseas orders continued to be impressive; among them, new orders for mine operation and cement operation and maintenance were +32%/+15%, respectively. By the end of 2023, the company had implemented 281 mine operation and maintenance service projects, including 5 overseas projects; the operation and maintenance business completed 650 million tons of mineral supply, +25% over the same period, and implemented 56 cement operation and maintenance service production lines, providing annual production capacity exceeding 100 million tons, +23% over the same period; by 24Q1, the three business sectors continued to improve their operations. The pattern is taking shape .
The comprehensive gross margin increased to 19.5%, and financial expenses were affected by exchange and increased significantly. The company's 24Q1 comprehensive gross margin was 19.5%, +2.5pct year on year; the cost ratio for the period was 11.2%, +1.9pct year over year. Among them, sales/management/R&D/finance expense ratios were -0.05pct/+0.38 pct/-0.08pct/+1.62pct, respectively. The financial expenses ratio increased significantly (an increase of 169 million yuan in terms of apparent financial expenses). 24Q1 compared to last year is expected to be mainly affected by exchange. Impairment (including credit) losses were 850 thousand yuan, compared with 4.93 million yuan in the same period last year. Net profit margin was 6.19%, +0.02pct year over year. The 24Q1 net operating cash amount was -1,188 billion yuan (-19.91 billion yuan in 23Q1), about 800 million yuan less than the year-on-year net outflow. We believe that the sharp improvement in the company's cash flow was mainly due to the company strengthening risk management and active promotion of project repayment; the payout ratio/payout ratio was 71.87%/84.68%, respectively, with a year-on-year change of +5.50pct/+3.66pct, due to the acceleration of project settlement and repayment.
With strong alliances of high-quality assets, “overseas reengineering” can be expected in the future. Intensive acquisition of the Group's interbank assets in 2021-23:1) Acquiring Beijing Kaisheng and Nanjing Kaisheng to strengthen the depth of cement engineering technology business in 2021; 2) Acquiring Smart Industry and Anruizhi to improve operation and maintenance services in 2022; 3) Successfully acquired Hefei Institute in 2023, bringing equipment manufacturing capacity to a new level; 4) The company and Tianshan Cement jointly increased capital of Sinoma Cement according to a 4:6 ratio; China Building Materials Group's goal of “using about 10 years to rebuild a Chinese building material overseas”. We believe that with the company's high-quality industrial resources within the China Building Materials Group, Sinoma Cement can significantly drive the company's overseas response to the three major business needs of cement engineering, equipment, operation and maintenance, and bring about an increase in overseas revenue and profits.
Investment advice
We maintain our 2024-26 revenue forecast. We expect revenue of 511.44/585.42/65.357 billion yuan, year-on-year growth rate of +11.7%/+14.5%/+11.6%, estimated net profit to mother of 33.03/38.35//4.487 billion yuan, year-on-year growth rate +13.3%/+16.1%/+17.0%. The expected EPS is 1.25/1.45/1.70 yuan, corresponding to the closing price of 10.13/8.72/7.45x on April 26 PE Maintain a “buy” rating.
Risk warning
Overseas market promotion falls short of expectations; policy promotion falls short of expectations; costs are higher than expected; systemic risks, etc.