Event: The company released its 2023 annual report and 2024 quarterly report. The company achieved revenue of 4.2 billion yuan in 2023, an increase of 26.91%; net profit to mother was 982 million yuan, an increase of 47.90%. Among them, 23Q4 revenue for the single quarter was 1,328 billion yuan, up 43.84%; net profit to mother was 314 million yuan, an increase of 61.17% over the same period, which greatly exceeded expectations. We expect the company to exceed expectations in 23Q4 mainly due to: 1) the impact of the pace of delivery. The fourth quarter is usually the peak delivery season for the whole year; 2) the revenue share of system software and solutions has increased dramatically. In 2023, the company's AMI revenue will account for 60% of overseas smart electricity revenue.
24Q1 single quarter: revenue of 902 million yuan, an increase of 13.66%; net profit to mother was 214 million yuan, an increase of 21.52%. We expect 24Q1's overseas revenue to be about 686 million yuan, an increase of 38%, and domestic revenue of about 216 million yuan, a decrease of 27%. The company's low revenue expectations for a single quarter are mainly affected by the pace of domestic meter order delivery, leading to a decline in domestic revenue.
Demand for overseas electricity meters is booming, and overseas electricity distribution is progressing beyond expectations. In 2023, the company 1) electricity revenue was 3,595 billion yuan, +23.93% year-on-year. Among them, the domestic market was 1,034 billion yuan, -5.47% year on year; overseas was 2,561 billion yuan, +41.72% year over year. 2) Distribution revenue was 406 million yuan, +24.19% year-on-year. Among them, the domestic market was 289 million yuan, -4.84% year on year; overseas was 117 million yuan, +406.67% year over year, mainly in Africa. 3) Revenue from new energy sources was 163 million yuan, +283.50% year-on-year. Among them, 50 million yuan was domestic, +78.14% year over year, and 113 million yuan overseas, +672.38% year over year, achieving successful bid and delivery of distribution network collection projects in the African market.
23Q4 & 23Q1 gross margin remained high, and the share of overseas AMI revenue continued to rise.
Margin side: 2023 gross margin +3.67pct to 41.90%; 23Q4 gross profit margin 45.73%, +6.39pct yoy, +2.42pct month-on-month; 24Q1 gross margin 44.25%, +5.61pct yoy, -1.48pct month-on-month. Rate side: The 2023 sales/management/ R&D/finance rate was 7.41%/3.77%/6.53%/-4.07%, -1.37pct/-0.52pct/-0.68pct/-0.41pct year-on-year. The company earned 33.29 million yuan in exchange for the year. Net interest rate: 2023 net interest rate +3.33pct yoy to 23.39%; 23Q4 net interest rate 23.64%, yoy +2.5pct; 24Q1 net interest rate 23.69%, +1.53pct yoy.
Cash flow: In 2023, the company's net operating cash flow was 1.01 billion yuan, an increase of 63.03%. In 24Q1, the company's operating cash flow was about 308 million yuan, maintaining high quality profits.
Profit forecasting and investment advice. The company's net profit for 2024-26 is expected to be 11.53/13.28/1,516 billion yuan, an increase of 17.3%/15.2%/14.2% over the same period, maintaining the “buy” rating.
Risk warning: Domestic and foreign meter tenders fall short of expectations, weak demand for new energy products, forecast bias, and valuation risk.