Incident: In 2023, the company achieved operating income of 2,414 billion yuan, a decrease of 10.51%; net profit to mother was 218 million yuan, an increase of 29.03%; net profit after deduction was 208 million yuan, an increase of 31.13%. The company's revenue for the first quarter of 2024 was 358 million yuan, a decrease of 16.12%; net profit to mother was 34 million yuan, an increase of 1.84%; net profit after deducting non-return to mother was 0.31 million yuan, an increase of 2.40%. The reviews are as follows:

Q4 Profits rose sharply, and revenue from the grain and oil processing business grew steadily. By industry, design consulting, mechanical and electrical engineering system delivery, engineering contracting, equipment manufacturing, and other businesses achieved revenue of 6.06, 10.74, 1.06, 5.57, and 171 million yuan, respectively, up 1.28%, -1.67%, -55.52%, -19.61%, and 34.92% respectively. By region, domestic and foreign revenue reached 22.75 million yuan and 139 million yuan respectively, up -13.52% and 106.59%, respectively. On a quarterly basis, the company's 2023Q1, Q2, Q3, and Q4 revenue increased 10.68%, -8.52%, -31.47%, and -7.72%, respectively. Net profit to mother increased 18.10%, 10.94%, 2.42%, and 52.80%, respectively. Net profit after deducting net income to mother increased 14.11%, 7.90%, -14.69%, and 66.03% year-on-year respectively; net interest rates for the single quarter were 7.86%, 8.45%, 6.45%, and 11.55%, respectively.

Gross margin increased, depreciation decreased, net interest rate increased, and net operating cash flow inflow increased. In terms of gross margin, gross margin increased 4.02 pcts to 24.74% in 2023. Among them, gross margins for design consulting, mechatronic engineering system delivery, and equipment manufacturing increased by -1.08, 2.47, and 7.76 pcts, respectively. In terms of the period cost ratio, the cost rate for the 2023 period also increased by 1.61 pcts to 12.19%, of which the sales expense ratio remained unchanged at 0.95%; the management expense ratio (including R&D expenses) increased by 1.56 pcts to 11.86%; and the financial expenses ratio also increased by 0.04 pcts to -0.62%. The total asset and credit impairment was 44 million yuan, a year-on-year decrease of 20 million yuan. In terms of net interest rate, net interest rate increased 2.68 pcts to 9.29% in 2023. The net operating cash flow in 2023 was 433 million yuan, and the inflow increased by 301 million yuan; of these, revenue increased 20.19 pcts to 114.22%, and current payments decreased 0.75 pcts to 87.83% compared to the same period.

Actively develop the main business and related businesses, and keep growing new orders. In 2023, the company signed a new contract of 3,965 billion yuan, an increase of 0.53%. Of these, new domestic signings amounted to RMB 3,638 million, accounting for 91.76%, and overseas signings amounted to RMB 327 million, accounting for 8.24%. In terms of product categories, the newly signed mechanical and electrical engineering system delivery business was 2.198 billion yuan, accounting for the company's largest contract type, accounting for 54.93%, an increase of 1.09%; the newly signed design consulting business was 760 million yuan, accounting for 19.17%, a decrease of 7.02%; and the newly signed equipment manufacturing business was 648 million yuan, accounting for 16.34%, an increase of 1.89%. The mechanical and electrical engineering system delivery, design consulting and equipment manufacturing business accounted for 90.44% of the company's total new signings. From an industry perspective, the grain and oil processing industry was newly signed at 3.339 billion yuan, accounting for 84.22%, an increase of 5.22%; the cold chain logistics industry was newly signed at 595 million yuan, accounting for 15.00%, a decrease of 20.84%.

Profit forecasting and ratings. As a leader in the development of the agrifood and cold chain industry, the company has obvious advantages. The trend of signing new orders is good, and its performance is expected to grow rapidly. We expect the company's 24-25 EPS to be 0.51 and 0.59 yuan, respectively, with a price-earnings ratio of 30-32 times in 2024, and a reasonable value range of 15.30-16.32 yuan, maintaining the “superior to the market” rating. Risk warning. Payback risk, policy risk, economic downturn risk.