The company released its 2023 annual report: achieved revenue of 5.809 billion yuan for the full year of 2023, -1.8% year-on-year, and net profit to mother 2.
0.4 billion yuan, -17.0% YoY; 23Q4 achieved revenue of 1,423 billion yuan, -8.3% YoY, -6.8% month-on-month, net profit of -47 million, YoY -163.1%, and -168.9% YoY. The company released its 2024 quarterly report: 24Q1 achieved revenue of 1.397 billion yuan, -2.1% year-on-year, -1.8% month-on-month, net profit of 10 million yuan, -87.8% year-on-year, and +122.5% month-on-month.
Performance review: 23Q4 showed a significant month-on-month decline and 24Q1 year-on-year decline. Our judgment is: 1) Operating side: market competition caused volume and price contraction, and structural changes further lowered gross profit margin. 23Q4 revenue -6.8% month-on-month, gross margin -4.5 pct month-on-month; 24Q1 revenue -2.1% year-on-year, and gross margin -7.5 pct year-on-year. 2) Non-financial: 23Q4 accrued asset impairment losses of 27 million yuan and credit impairment losses of 49 million, which in turn led to losses in the fourth quarter of 23.
2023 business segment split: wind power spindles (including forged spindles and foundry spindles) revenue of 1.31 billion, +26.5% YoY, gross profit margin 21.4%, YoY -0.4pct; casting revenue of 970 million, YoY -0.5%, gross profit margin 16.4%, YoY -0.3pct; wind power equipment module revenue of 510 million, YoY -49.1%, gross profit margin 5.4%, +0.8pct; other forging revenue of 1.37 billion yuan, +30.4% YoY, +0.1pct 380 million, same Compared to -29.9%, gross profit margin 8.0%, year-on-year +1.0pct; revenue from structural parts and complete equipment was 290 million, -15.1% year-on-year, gross profit margin 11.5%, year-on-year -3.6 pct; powder metallurgy product revenue of 420 million yuan, +5.8% year-on-year, gross profit margin 10.9%, year-on-year +0.2pct.
The casting and forging-related business is expected to recover, and the extension of the industrial chain will further open up room for growth. Affected by supply, demand and competition in the wind power industry, the profits of the company's related casting and forging business, especially casting products, were damaged. In the future, the company will dig deeper into the production process, reduce costs with accurate accounting, improve efficiency through process innovation, and it is expected to restore profit levels. In addition, the company continues to strengthen market development for non-wind power products. Marine forgings, hydropower forgings, etc. all increased significantly compared to the previous year. At the same time, the company is also preparing the technology and production capacity to develop the cast steel product market, and has already obtained the first orders for cast steel products from some customers.
Profit forecast and investment rating: Considering competition in the wind power industry, we revised down our profit forecast. We expect to achieve net profit of 2.8/3.6/420 million yuan in 24-26 (previous forecast value of 5.7/650 million yuan in 24-25), up 36%/29%/16% year over year. The current stock price corresponds to PE 31/24/21 times, respectively, and lowered to the “increase” rating.
Risk warning: Industry demand falls short of expectations; capacity construction falls short of expectations; market competition intensifies, etc.