Incident: The company achieved revenue of 609.408 billion yuan in 2023, an increase of 6.43%, net profit to mother of 12.988 billion yuan, an increase of 13.59%, after deducting net profit not attributable to mother of 11.713 billion yuan, an increase of 13.17%. The reviews are as follows:
Q4 Profit growth accelerated, new energy investment and operation grew steadily, and overseas gross margin recovered markedly. On a quarterly basis, total revenue for 2023Q1, Q2, Q3, and Q4 increased 0.66%, 11.12%, 6.55%, and 7.11%, respectively; net profit to mother increased by 8.70%, 13.25%, 7.77%, and 23.98%, respectively. By industry, engineering contracting and surveying and design, power investment and operation, and others achieved revenue of 5505.60, 239.78, and 31,508 billion yuan, respectively; of these, the new energy investment and operation business achieved revenue of 9.509 billion yuan, an increase of 10.04%, accounting for 1.56% of revenue, an increase of 0.05 pct, and a gross profit ratio of 6.25%, and a decrease of 0.70 pct. By region, domestic and overseas revenue reached 524.7.17 billion yuan and 81,329 billion yuan respectively, up 6.09% and 8.69% respectively. Domestic and overseas gross margins rose 0.70/3.12 pct to 13.17%/12.63%, respectively.
Gross profit margins have risen, expense ratios have risen, net interest rates have risen, and cash inflows have declined. In terms of gross margin, gross margin increased 1.02 pcts to 13.23% in 2023, with gross margins of engineering contracting, surveying and design, power investment and operation, and other businesses rising 0.98, 4.27, and 5.71 pcts, respectively. The cost ratio increased by 0.71 pcts to 8.77% during the period, with the sales expense ratio unchanged; the management expense ratio (including R&D expenses) rose 0.28 pcts to 6.82%; and the financial expenses ratio increased by 0.45 pcts to 1.71 percent (mainly due to an increase in net exchange losses). In addition, investment income in 2023 was approximately RMB 826 million, a decrease of 5.19%, and asset+credit impairment losses amounted to RMB 6.689 billion, and losses also increased by 32.90%. Overall, the 2023 net interest rate also increased 0.08 pct to 2.82%.
The net operating cash flow inflow was $22.265 billion, and the net inflow decreased by 27.79% (mainly due to a decrease in tax rebates received); of these, revenue increased 2.87 pcts to 102.26%, and current payments increased 2.34 pcts to 97.20% over the same period.
The new energy and power business increased by 36.17% in '23, and the growth rate of “water, energy, sand” is impressive. The company signed a new contract of 1142,844 billion yuan in 2023, an increase of 13.24% over the same period. Among them, 9276.71 billion yuan and 215.173 billion yuan were newly signed at home and abroad, respectively, 13.57% and 11.87% compared with the same period last year. Looking at the business segment in 2023:616.774 billion yuan was newly signed for the energy and power business, an increase of 36.17%; of these, photovoltaic power generation and pumped storage power plants were newly signed at 2798.97 billion yuan and 78.051 billion yuan respectively, up 44.54% and 220.61% respectively. The company signed a new water conservancy business of 10.730 billion yuan, which also increased by 70.39%. As of 2023, the company's holding grid-connected installed capacity was 27.885 million kilowatts, an increase of 33.39%, accounting for 84.60% of clean energy; the company's reserves of green gravel resources were 8.934 billion tons, design production capacity reached 505 million tons/year, and production capacity reached 132 million tons/year. The company plans to sign a new contract of 1268 billion yuan in 2024, an increase of 10.95% over the completion amount in 23.
Profit forecasting and ratings. The company has successfully transitioned from being a leader in the hydropower industry to a new energy investment operator, benefiting from the “Belt and Road”. There is a high increase in new overseas signings, and the pace of “water, energy, and sand” development is impressive. We expect the company's 24-25 BPS to be 10.07 yuan and 10.97 yuan, respectively, with a net market ratio of 0.7-0.8 times in 2024, and a reasonable value range of 7.05-8.06 yuan, maintaining the “superior to the market” rating.
Risk warning. Refund risk, business development risk, policy risk.