Net profit to mother +288% in the first quarter of 2024. Maintaining the “plus” rating in 2023, the company achieved operating income of 3.06 billion yuan/yoy +32.1%; net profit of 102 million/yoy -26.6%; net profit after deducting non-return to mother of 94 million/yoy -21.0%; the year-on-year decline in profit was mainly due to the recovery of large long-term receivables from previous projects, which led to a high profit base in 2022. 2024Q1 achieved revenue of 673 million/yoy +6.8%; net profit due to mother of 31 million/yoy +288.4%; net profit after deduction of 30 million/yoy +293.5%. We expect the company's net profit to be 1.5/200/250 million yuan for 24-26, and the corresponding PE is 44/33/26. Comparable to the 24-year Wind, the average PE was expected to be 20 times higher. Considering the trend of high-end and large-scale shipbuilding, the company's leading edge in ship design and development is prominent. It gives 48 times PE in 24 years, corresponding to a target price of 4.32 yuan (previous value 5.20) yuan, and maintains an “increase” rating.
Profitability continued to pick up, and the expansion of the financing scale put pressure on the company to achieve a gross profit margin of 11.0% /yoy+1.43pp in 2023; in the first quarter of 2024, the company's gross profit margin was 19.4%, +9.69pp year on year, and profitability continued to rise. In terms of the period cost ratio, the total cost rate for the 2023 period was 8.13%, year-on-year -2.11pp; of these, sales expenses ratio was 0.7% /yoy-0.48pp, management expenses ratio 6.0% /yoy+0.75pp, financial expenses ratio 0.4% /yoy-2.06pp, and R&D expenses ratio 1.1% /yoy-0.31pp. The increase in the financial expense ratio was mainly due to an increase in the scale of financing in 2023, an increase in interest expenses, while interest income and net exchange earnings fell below the base period level.
The global shipbuilding market is progressing steadily, with abundant on-hand orders supporting active demand in the global shipbuilding market in 2023. The three major shipbuilding indicators grew simultaneously. The company seized market opportunities, and profitability continued to strengthen. In 2023, shipbuilding engineering general contracting business revenue reached $3.259 billion, up 35.91% year on year, gross margin reached 9.27%, up 1.66pp year on year; marine engineering design technology service business reached 112 million yuan, up 22% year on year, gross margin reached 40.26%, up 0.32pp year on year.
By the end of 2023, the company's on-hand orders for shipbuilding and marine engineering design business were 184 million yuan, total orders for construction business were about 10.789 billion yuan, and on-hand orders for supervision business were 40.24 million yuan. Profitability is expected to increase further in the future as the company gradually releases high-value orders in hand.
A leader in shipbuilding and marine engineering design and development, the entire industry chain system layout helps growth rely on subsidiaries to build the entire shipbuilding and marine engineering industry chain system. 1) In the field of shipbuilding engineering, the “Hailong” saturated diving support ship project designed by the subsidiary Shanghai Jiahao in 2023 filled the gap in independent design in the field of domestic special saturated diving support vessels. 2) In the field of defense equipment, in September 2023, the subsidiary Jinhaiyun participated in the 23rd Industrial Fair with various marine supporting products such as multi-function pneumatic rescue throwers, airdrop lifeboats, and underwater wireless communication. Among them, the intelligent search and rescue unmanned boat project attracted much attention and won the Innovation Award at the Annual High-tech Achievements Exhibition. 3) In the field of ship operation, the company acquired Changhai Shipping Company at the end of 2022 to achieve a long-term strategy of layout and development into the field of ship leasing and operation by deepening into major markets and application scenarios by developing ship leasing and operation business.
Risk warning: risk of fluctuations in raw material prices; risk of exchange rate fluctuations.