Incident: The company disclosed its 2024 quarterly report, achieving operating income of 4.427 billion yuan, a year-on-year decrease of 11.77%; net profit to mother of 203 million yuan, an increase of 1.12%; deducted non-net profit of 874.663 million yuan, a year-on-year decrease of 38.79%.
Q1 Profitability improved year over year, and increases in R&D expenses and government subsidies affected non-performance. Q1 The company's gross margin/net margin was 10.59/ 4.59% respectively, up 1.34/0.59pct year-on-year respectively. The company's net operating cash flow was 84.211,400 yuan, a year-on-year decrease of 49.97%, mainly due to a decrease in operating income for the current period. The company's cost rate for the period was 7.18%, an increase of 2.54 pct over the previous year. Among them, the sales/management (including R&D) /finance expense ratios were 0.51/4.98/ 1.70%, an increase of 0.05/2.14/0.36 pct year-on-year respectively, mainly due to increased R&D investment. Q1 R&D expenses were 157 million yuan, an increase of 105.44% year over year.
Other revenue was $154 million, up 107.92% year over year, mainly due to the increase in government subsidies related to the company's daily operating activities confirmed in this period.
New orders were generally stable, and net profit improved year-on-year after deduction of non-ton after R&D. Q1 The company signed a new contract amount of about 6.965 billion yuan, a year-on-year decrease of 3.33%. Q1 The company's steel structure output was about 917,900 tons, an increase of 0.09% over the previous year. According to our estimates, Q1's net profit after deducting non-ton was 105.31 yuan/ton, a year-on-year decrease of 35.94%, mainly affected by the high investment in R&D expenses. If R&D expenses were added back, Q1 net profit after deducting non-ton increased 17.02% year on year.
Large-scale tenders for robot parts, and intelligent manufacturing continues to advance. The company attaches importance to intelligent transformation technology. In 2021, the company set up a special intelligent manufacturing R&D team. In recent years, it has developed or introduced a series of advanced equipment including fully automatic steel plate cutting and distribution production lines, intelligent high-power flat laser cutting equipment, intelligent four-chuck laser pipe cutting machines, and intelligent three-dimensional five-axis laser cutting machines. In April 2024, the company issued tender notices one after another. It plans to bid for 2,000 sets of robot ground rails, gun cleaners, etc., and the intelligent layout is expected to accelerate in the future.
Investment advice: R&D expenses are dragging down profits, intelligent manufacturing continues to advance, and maintain the rating of increasing holdings. The company's net profit from 2024 to 2026 is expected to reach 13.1 billion yuan, 15.4 billion yuan, and 1.66 billion yuan, respectively, up 11%, 18%, and 8% year-on-year, respectively, corresponding to PE valuation 11, 9, and 8 times. The company builds a development strategy centered on steel structure manufacturing based on advantages such as procurement, management, cost control, and R&D. Adopt a reasonable gross margin pricing mechanism to control the risk of steel price increases.
Risk warning: macroeconomic policy changes; risk of price fluctuations of major raw materials; employment risk; risk of market competition; new orders or order completion falling short of expectations; policy falling short of expectations; risk of production bases distributed across the country, etc.