Incidents:
Recently, the company released the 2023 report and the 2024 quarterly report. In 2023, the company achieved operating income of 73.222 billion yuan, -8.49% year on year; realized net profit of 4.527 billion yuan, +5.96% year on year; single 2024Q1 company achieved operating income of 17.662 billion yuan, about -0.73% year on year; net profit to mother of 1,580 billion yuan, +4.21% year on year. The comments are as follows:
Profitability increased, and the rate of expenses increased during the period. In 2023, the company's gross sales margin was about 27.71%, about +3.69pct year on year; the net profit margin was about 6.29%, +0.79pct year on year. As the company continues to promote a high-quality development strategy, profitability is expected to increase further. The company's cost ratio for the period was 19.49%, +0.03pct year on year. Of these, sales/management/R&D/finance expenses accounted for 8.40%/3.58%/7.92%/-0.63% of operating income, mainly due to sales and management expense ratios of +0.60pct and +0.31pct year over year, and overall cost control was good. In 2023, the company achieved net operating cash flow of 5.708 billion yuan, of which net operating cash flow of 4.377 billion yuan was achieved in 24Q1 alone.
The market share has steadily increased, and electrification products continue to advance. The company has the largest domestic market share in 13 categories of leading products, including large excavators. By product, in 2023, the company's excavation machinery achieved revenue of 27.636 billion yuan, ranking first in the domestic market sales for 13 consecutive years; concrete machinery achieved revenue of 15.315 billion yuan; lifting machinery achieved revenue of about 13 billion yuan, a sharp increase in global market share; pavers achieved revenue of 2,485 billion yuan, with a market share of more than 30% for road rollers and graders; pile machinery achieved revenue of about 2,085 billion yuan, and the domestic market share of rotary drilling rigs exceeded 40%. In 2023, the company's electric products achieved revenue of about 3.146 billion yuan, and hydrogen energy products achieved revenue of about 130 million yuan. The company continued to make efforts in electric products, providing the industry's first batch of unmanned electric loaders and delivering mixing plants for commercial operation. Furthermore, the company's sales market share of electric mixers and electric cranes is in a leading position in the industry.
The international market is growing steadily, and improving quality is driving profit growth at an accelerated pace. The company achieved overseas sales revenue of 43.258 billion yuan in 2023, an increase of 18.28% over the previous year; the company's overseas product sales have covered more than 180 countries and regions, with Asia, Australia and Europe, which account for the highest share, achieved revenue of about 16.5 billion yuan and 16.25 billion yuan respectively, with year-on-year growth rates of 11.10% and 37.97%, respectively. The company firmly established a high-quality development path and increased its global layout. The company's gross profit margin for international business in 20233 was 30.78%, which improved significantly.
Investment rating: The company's net profit for 2024-2026 is estimated to be 6.021 billion, 7.818 billion, and 9.386 billion, respectively. The corresponding PE is 23x, 18x, and 15x, respectively, covered for the first time, giving it an “increase in wealth” rating.
Risk warning: Downstream sentiment recovery falls short of expectations; risk of failure of profit forecasting and valuation models