Description of the event
The company released its 2023 annual report and 2024 quarterly report. In 2023, the company achieved revenue of about 1.95 billion yuan, up 7.4% year on year, and achieved net profit of 410 million yuan, up 16.9% year on year; of these, 2023Q4 achieved operating income of 61 million yuan, an increase of 1.7% year on year, and net profit to mother of 80 million yuan, down 27.6% year on year. The company achieved operating income of about 260 million yuan and net profit to mother of about 0.3 billion yuan in 2024Q1, a year-on-year decline.
Incident comments
Looking at the full-year dimension, the company's revenue in 2023 is expected to increase year-on-year, mainly due to an increase in shipping volume, achieving a gross margin of about 33%, a year-on-year increase of 3.1 pct, a year-on-year cost rate of 8.9%, a year-on-year increase of 0.3 pct due to an increase in sales staff, an increase of 1.3 pct year-on-year due to an increase in casting business managers and sales, an increase of 0.4 pct year-on-year, and a year-on-year decrease of 0.4 pct due to increased interest income. The company calculated asset impairment losses of 0.17 million yuan and recovered about 06 billion yuan in credit impairment. Ultimately, the net interest rate was about 21.2%, an increase of about 1.7 pct over the previous year.
Looking at the specific split business: 1) Wind power products: The company shipped about 157,000 tons (up 6.7% year on year), achieving revenue of about 1.6 billion yuan, up 1.4% year on year, gross margin of about 33.7%, up 3.2 pct year on year; 2) Other casting and forging products: The company shipped about 26,000 tons, achieving revenue of about 290 million yuan, up 67.9% year on year, gross margin of about 35.7% year on year, up about 5 pct year on year. Among them, according to Q4 alone, the company's revenue increased year on year, and gross margin was about 27.7%, which is down year on year. It is expected to be mainly due to the transformation of the Dongying base and a rise in casting production capacity. In the end, the company achieved a net sales margin of approximately 13.9%.
On a quarterly basis, 2024Q1's revenue declined year on year due to a phased decline in shipping volume, achieving gross margin of about 23.9%, with a period cost ratio of 14.1%. The sales expenses ratio, management expenses ratio, and R&D expenses ratio increased by 1 pct, 4.1 pct, and 3.4 pct year on year, respectively, and the financial expenses ratio decreased 3.2 pct year on year.
According to other financial indicators, in 2023, 2024Q1 achieved net operating cash flow inflow of 390 million yuan and net outflow of 0.1 billion yuan, capital expenditure of 610 million yuan, respectively. The company's 24Q1 capital expenditure declined year-on-year, mainly due to the basic completion of new project construction.
In addition, the company disclosed that it plans to invest 2,651 billion yuan (fixed asset investment of about 2,515 billion yuan, working capital of about 136 million yuan) to build a high-end transmission equipment science and technology innovation industrial park project in three phases (the first phase). The construction period is 4.5 years, which will eventually form a full-process manufacturing capacity for large-scale high-end forging products with an annual output of 280,000 tons.
Looking ahead, domestic seabreeze installations are expected to rise to 10GW in 2024, and overseas marine landscape is actively being restored. It is expected that 2025/2026 will usher in explosive growth. The company is actively developing domestic and foreign casting markets. In addition, the Dongying base has already been put into operation and production capacity is gradually being released, which is expected to fully benefit from domestic and foreign sea breezes. At the same time, the company is building a full-process production capacity for high-end forgings and promoting the development of new sliding bearing products, which is expected to increase performance. The company's net profit is expected to return to mother in 2024, which is about 11 times PE. Maintain a “buy” rating.
Risk warning
1. The installed capacity of the wind power industry falls short of expectations;
2. The competitive pattern in the wind power spindle industry has deteriorated.