Incident: In 2023, the company achieved revenue of 5.46 billion yuan, a year-on-year increase of 3.9%, net profit of 277 million yuan, a year-on-year decrease of 9.6%, EPS was 0.24 yuan, a year-on-year decrease of 28.0%. The decline in EPS was greater than that of net profit to mother, mainly due to the company issuing perpetual bonds, and paid interest on perpetual bonds of about 58.35 million yuan in fiscal year 23.

The terminal business performed well, and the shipping sector was under pressure: in '23, the company's port sector achieved revenue of 799 million yuan, an increase of 13.6% over the previous year, and a gross profit margin of 47.3%, up 6.6 pcts from last year. Among its terminals, Xinghua Port's container throughput was 1.910,000 boxes, a sharp increase of 81%; Ganghong Terminal completed a cargo throughput of 16.327 million tons, an increase of 71% over the previous year; the cargo and container throughput of Guiping Xinlong Terminal all more than doubled; among all terminals, Yunfu New Port was limited by the slump in the stone market, and throughput declined slightly.

The shipping sector is limited by the market downturn and is currently in a state of loss. In 23 years, it achieved revenue of 523 million yuan and a gross profit margin of -7.1%. In order to cope with the unfavorable situation, the company continues to reduce costs and increase efficiency. Currently, all 29 LNG barge transformation projects have been completed and delivered to promote the green and low-carbon development of the fleet. By actively participating in major customer tenders, the company expanded the return supply and ensured stable convection of goods. The company achieved total transportation of 14.536 million tons of bulk cargo throughout the year, an increase of 36.7% over the previous year, and 313,000 TEUs in container transportation, a year-on-year decrease of 36.1%.

The performance of the new energy sector was stable: in '23, the company's new energy sector achieved revenue of 2.36 billion yuan, gross profit margin of 28.7%, an increase of 1.0 pct over the previous year. Its seven wind farms achieved 680 million kilowatts of feed-in electricity, a year-on-year decrease of 2.0%; wind power companies achieved operating profit of 128 million yuan, an increase of 4.7% over the previous year; the total installed capacity of PV Holdings reached 45.78 megawatts, achieving 31.17 million kilowatt-hours of feed-in electricity; Xiuqiang Co., Ltd. steadily promoted new energy projects, and provided BIPV module products and BIPV glass product samples for various key construction projects in Jiangsu and Guangdong during the reporting period.

The increase in financial expenses and asset impairment is the main reason for the decline in net profit: the decline in the company's net profit due to the increase in financial expenses and asset and credit impairment in '23 was mainly due to the increase in financial expenses and asset and credit impairment.

The company's financial expenses in '23 were 318 million yuan, compared to 261 million yuan in the same period last year. At the same time, interest expenses on perpetual bonds were added this year. It can be seen that overall interest expenses have increased significantly. Among the company's long-term loans, foreign currency loans account for a relatively high share (mainly in Hong Kong dollars). Interest on the company's foreign currency loans has increased due to overseas interest rate hikes, which is the main reason for the increase in financial expenses. The decline in exchange earnings and the consolidation of ongoing construction also led to an increase in financial expenses.

In terms of impairment, the company accrued asset impairment losses of 0.48 million yuan in 23 years, mainly because Xiuqiang Co., Ltd. calculated fixed asset impairment provisions; credit asset impairment amounts to 32 million yuan, mainly to prepare for bad receivables.

Together, the two are about 80 million yuan, which is a significant increase from the total of 119 million yuan in the same period last year.

Pay attention to shareholder returns and increase the dividend ratio: the company's dividend was 0.12 yuan per share in '23, accounting for 39% of net profit to mother in '23 and 50% of EPS for that year. The dividend was significantly higher than 0.07 yuan per share in '22. The company also implemented a share repurchase of approximately RMB 78 million. It can be seen that companies are paying more and more attention to shareholder returns.

Company profit forecast and investment rating: The company's net profit for 24-26 is estimated to be $3.7, 4.2 billion, and 480 million yuan, respectively, and EPS of 0.34, 0.39 and 0.46 yuan, respectively. The company's port and shipping supply chain logistics system around the Xijiang River has been gradually improved, forming a pattern of joint development between upstream and downstream parties in the industrial chain; the clean energy sector continues to achieve breakthroughs as the company's second main business, and the photovoltaic and wind power business is expected to continue to increase profits.

We believe that the company has been operating well for a long time and maintains a “recommended” rating.

Risk warning: macroeconomics fall short of expectations; shipping prices fluctuate greatly; participating companies' performance fluctuate, policy changes; commodity prices fluctuate greatly.