Description of the event
CITIC released its 2023 annual report and 2024 quarterly report. In 2023, the company achieved revenue of 6.39 billion yuan, up 73% year on year; net profit of 345 million yuan, up 677% year on year; of these, 2023Q4 achieved revenue of 2,997 billion yuan, up 108% year on year, up 104% month on month; net profit to mother of 188 million yuan, up 229% year on year, up 216% month on month. 2024Q1 achieved revenue of 1,814 billion yuan, up 122% year on year, down 39% month on month; net profit to mother was 154 million yuan, up 297% year on year, down 18% month on month.
Incident comments
The 24Q1 results significantly exceeded expectations, proving the sustainability of the company's profits. 2024Q1 revenue increased significantly year-on-year, and it is expected that it will continue to deliver overseas orders from the Middle East, India, etc. The gross margin of 2024Q1 reached 20.8%, up 7.3 pct year on year and 0.9 pct month-on-month. This is expected to increase the share of tracking brackets.
In 23 years, the number of tracking brackets was greatly expanded, and gross margin increased significantly. By business, revenue for fixed and tracking brackets in 2023 was 20.62 billion yuan and 3,598 billion yuan respectively, up 26% and 124% year-on-year. Mainly, there was a sharp increase in stent sales. In 2023, sales of fixed and tracking brackets were 9.40 and 7.64 GW respectively, with year-on-year increases of 30% and 129%. In terms of profit level, gross margin in 2023 was 18.1%, up about 5.7pct year on year. Among them, fixed and tracking bracket gross margins were 16.9% and 20.0% respectively, up 5.6 pct and 6.2 pct year on year. The company's gross margin has been greatly improved, mainly due to factors such as lower prices for upstream raw materials and scale effects brought about by increased sales volume.
Other financial indicators, the cost rate for the 2023 period was 8.99%. It has continued to decline over the past three years, and the ability to control expenses has continued to improve. The cost rate was 9.6% during 2024Q1, which also remained at a good level. The company's expense ratio usually shows a quarterly downward trend, and is expected to remain below 9% throughout this year. The net interest rates of 2023Q3, 2023Q4, and 2024Q1 reached 4.0%, 6.3%, and 8.5% respectively. The upward trend is clear from quarter to quarter, indicating that the company has entered the profit improvement channel.
Looking ahead to the future, the company's quantitative profit trend is clearly improving, and it is worth looking forward to. In terms of volume, the company had 6.8 billion orders in hand at the end of Q1 (tracking 5.9 billion + fixed 800 million + other 100 million dollars), which supported continued high revenue growth this year, and the structure was further skewed towards a high-profit tracking bracket. On the market side, the company seizes opportunities for accelerated growth in non-European and American overseas markets, strengthens its local layout in Latin America, and at the same time consolidates the advantages of the Middle East and India. Fortunately, the logic of increasing demand for terrestrial power plants and tracking penetration continues to be implemented. We expect that the gross margin of subsequent companies' new orders for tracking and fixed brackets will remain at a good level, and there is no shortage of room for further improvement.
We have revised the company's profit forecast. It is estimated that the company will achieve net profit of 760 million or 960 million in 2024-2025, corresponding to PE 19 or 15 times. Maintain a “buy” rating.
Risk warning
1. Deterioration of the competitive landscape;
2. PV installation falls short of expectations.