The company released its 2023 annual report and 2024 quarterly report, and its performance decreased by 8.27%/10.06% year-on-year, respectively.
The company's smart appliance business is operating steadily, household photovoltaics continues to grow rapidly, and the brand continues to enhance its international influence. Maintain a buy rating.
Key points to support ratings
The company's performance in 2023 decreased 8.27% year on year: the company released its 2023 annual report, achieving revenue of 57.251 billion yuan, an increase of 24.53%; realized net profit to mother of 3,686 billion yuan, a year-on-year decrease of 8.27%; and realized deduction of non-net profit of 3.829 billion yuan, an increase of 14.95% year on year.
2024Q1's performance decreased 10.06% year on year: the company released its 2024 quarterly report, achieving net profit of 1,081 billion yuan, a year-on-year decrease of 10.06% and a year-on-year increase of 55.49%.
The revenue of the low-voltage appliance segment continued to grow, and the channel layout was deepened: in 2023, the company's smart appliance segment achieved revenue of 20.039 billion yuan, an increase of 7.84% year on year; gross margin increased 1.85 percentage points year on year to 28.04% year on year. The company is based on the Group's entire industry chain and channel resource advantages. By the end of 2023, it had 445 first-level dealers, 21,860 second-level distributors, and more than 100,000 terminal channels, achieving a coverage rate of about 92% at the district and county levels.
Household photovoltaics continued to grow rapidly: the company's household photovoltaic business expanded rapidly. In 2023, the PV power plant engineering contracting business achieved revenue of 27.298 billion yuan, up 126.86% year on year; gross margin decreased by 3.50 percentage points to 10.05% year on year; in 2023, the company added more than 12 GW of installed capacity, accounting for about 29% of the country's new installed capacity. The market share remained number one in the industry for many years. The sales volume of power plants was about 8 GW. By the end of 2023, Zhengtai Aneng's own installed capacity was about 14 GW.
Continue to promote global regional localization and steadily enhance the brand's international influence: The company has accelerated the promotion of a global business structure system with regional headquarters and localized subsidiaries as the core. The total number of localized national companies has reached more than 30, and the localization rate has reached 65%. In 2023, the company's international business achieved revenue of 4.469 billion yuan, an increase of 16% over the previous year. Among them, revenue in the Greater Asia Pacific region increased 12% year over year; revenue in Greater Europe increased 13% year over year; revenue in North America increased 51% year over year; and revenue in West Asia and Africa increased 23% year over year.
valuations
Under the current share capital, considering the slight decline in the company's profitability, we adjusted the company's 2024-2026 earnings forecast to 2.09/2.41/2.72 yuan (the original forecast for 2024-2026 was 2.70/3.15/-yuan), corresponding to a price-earnings ratio of 9.8/8.5/7.6 times; maintaining the purchase rating.
The main risks faced by ratings
Raw material price risk; PV policy risk; PV power plant subsidy arrears and power restrictions risk; domestic fixed asset investment falls short of expectations; overseas market expansion falls short of expectations; and the impact of COVID-19 exceeds expectations.