Net profit to mother surged 32% in 24Q1. In 2024Q1, the new energy business continued to release the company achieved revenue of 97.404 billion yuan, +10.04% year-on-year. Net profit to mother was 1,481 billion yuan, +31.71% year-on-year. After deducting non-net profit, it was 1,117 billion yuan, +9.98% year over year. Among them, new energy and comprehensive smart energy achieved operating income of 29.61 billion yuan, an increase of 34.5% over the previous year, accounting for 30.4% of the company's total revenue; an investment of 4.7 billion yuan, an increase of 60.4% over the previous year, fully demonstrating the role of new energy as the first engine of performance growth. We expect the company's net profit to be 87.96.10.6 billion in 24-26, corresponding PE of 10.66/9.72/8.74, maintaining a “buy” rating.

New energy business orders continue to rise. I am optimistic that in the first quarter of the company's new energy transformation, the company will complete a new contract amount of 367.756 billion yuan, an increase of 23.53% over the previous year. New contracts were signed for core business engineering construction amounting to RMB 315.168 billion, of which new contracts for traditional energy, new energy and integrated smart energy, urban construction, and integrated transportation were RMB 785.8, 1399.7, 468.28, and 6.071 billion yuan, respectively, of +19.82%, +1.72%, +33.75%, and -67.54% year-on-year respectively. In addition, the company plans to issue shares to specific targets to raise no more than 14.85 billion yuan for new integrated energy projects, mainly new energy sources, and the new energy business is expected to continue to grow rapidly. By region, the amount of new contracts signed domestically was 275.93 billion yuan, an increase of 25% over the previous year; the amount of new contracts signed abroad was 91.83 billion yuan, an increase of 19.4% over the previous year. Among them, the amount of new contracts signed by the “Belt and Road” co-building countries increased 25.1% year on year.

Profitability has improved significantly, and cash flow is under phased pressure

24Q1 achieved a gross profit margin of 10.71%, +0.65pct year over year. The cost ratio increased by 0.23pct to 7.31% during the period. Among them, sales, management, finance, and R&D expenses were 0.49%, 3.76%, 1.4%, and 1.66%, respectively, +0.04, -0.15, +0.14, and +0.2pct, respectively. 24Q1 achieved net investment income of 228 million yuan (-34 million yuan in the same period last year), accrued asset impairment losses of 199 million yuan, an increase of 212 million yuan over the previous year, and a credit impairment loss of 132 million yuan, an increase of 130 million yuan over the previous year. Under the combined influence, the company's net interest rate was 2.41%, +0.32pct year-on-year. The net outflow of the 24Q1 CFO was 16.193 billion yuan, an increase of 743 million yuan over the same period last year. Transactional financial assets increased 882.31% year over year to 4.142 billion yuan. The main reason for the sharp increase in transactional financial assets was that finance companies purchased fixed income transactional financial assets based on liquidity management.

Risk warning: Investment in power infrastructure is slowing down, repayment pressure is high, and policies fall short of expectations.