Incidents:
The company released its 2023 annual report and 2024 quarterly report: the company's revenue for 2023 was 4.325 billion yuan, a year-on-year decrease of 15.30%; the return was 425 million yuan, a year-on-year decrease of 5.58%. The decline in the company's revenue in 2023 was mainly due to the company's active elimination of some risky domestic onshore product projects. The decline in the company's profit is mainly due to: 1) The extended execution time of an overseas project. The settlement amount of the project was reduced through negotiations between the company and the customer, which affected the net profit of about 91 million yuan. 2) Depreciation and amortization and related financial expenses resulting from the consolidation of the Fuxin Zhangwu Wind Farm affected net profit of about 16 million yuan.
2024Q1's revenue was 463 million yuan, down 45.83% year on year; it returned 53 million yuan, down 29.12% year on year. The decline in 2024Q1's performance was mainly due to the low season for the industry in the first quarter. At the same time, the company calculated losses of about 10 million yuan due to changes in fair value and asset impairment.
Report highlights:
The share of overseas business increased, and the company's profitability increased
In 2023, the company's total export volume increased by more than 60% year on year, and overseas business revenue was 1,715 billion yuan, up 104.63% year on year; accounting for 39.64%, up 23.23pct year on year. The company's exports are mainly marine products. In 2023, overseas offshore shipping volume was nearly 100,000 tons, sales increased by more than 4,000 percent year on year, and revenue increased by 4,300 percent year on year. Benefiting from the optimization of the company's revenue structure, the company's gross profit margin was 23.44% in 2023, up 6.72 pcts year on year; 2024Q1's gross profit margin was 31.60%, up 12.60 pct year on year.
Overseas orders are plentiful, and overseas offshore engineering strategies are progressing steadily
In 2023, the company shipped nearly 100,000 tons of offshore products to Europe, and the total number of orders signed increased by more than 50% over the same period last year.
The company has plenty of overseas orders, and the total demand for various offshore projects in Europe, Japan, South Korea, the United States and other places exceeds 3 million tons, involving a range of offshore products such as pipe piles, conduit frames, and floating foundations. It is expected to obtain tender opening results one after another in 2024-2027.
New energy power generation projects have been expanded in an orderly manner, creating a new performance growth point. In 2023, the 250MW wind power project in Liujiazi, Zhangwu, Fuxin achieved grid-connected power generation, generating more than 400 million kilowatts of electricity throughout the year, contributing 132 million yuan in revenue, and a gross margin of 89.65%. The company has completed the filing of the 250MW fish-light complementary photovoltaic project in Caofeidian, Tangshan. It is expected to start construction in mid-2024 and strive to be completed within this year. In addition, the company added a total of 1 GW of new energy development projects included in the reserve in Hebei Province. The company's reserves for new energy projects provide a guarantee for subsequent performance growth.
Investment advice and profit forecasting
We expect the company's net profit to be 6.3/9.0/1.19 billion yuan in 2024-2026, respectively, and the current stock price corresponding to PE is 21.9/15.4/11.6 times, respectively, maintaining the “increase in holdings” rating.
Risk warning
There is a risk that raw material prices will fluctuate greatly, market competition will increase the risk, the risk of project contract extension, the risk that the company's overseas business will not advance as expected, and the risk of international trade policy.