Description of the event
The company released its 2023 annual report, achieving full year revenue of 74.019 billion yuan, a decrease of 8.44%; realized net profit of 4.527 billion yuan, an increase of 5.53%; and realized net profit of 4.388 billion yuan without return to mother, an increase of 40.35%.
The company released its 2024 quarterly report, achieving revenue of 17.830 billion yuan, a decrease of 0.95%; realized net profit of 1,580 billion yuan, an increase of 4.21%; and realized net profit of non-return to mother of 1,346 billion yuan, a decrease of 6.41%.
Incident reviews
Revenue has remained stable, and performance has increased steadily. By product, the company achieved revenue of 153.15, 276.36, 129.99, 20.85, 24.85, and 11.01 billion yuan in 2023, respectively, with year-on-year growth rates of 1.55%, -22.71%, 2.60%, -31.97%, -19.32%, and 29.96%, respectively.
The gross margin increased markedly year-on-year, and the expense ratio remained stable. The company's gross margin increased by 3.69 pct to 27.71% in 2023. The main reasons include an increase in domestic and foreign gross margin and an increase in the share of international revenue. China's domestic gross margin increased 1.07pct to 23.04%, and international gross margin increased 4.42pct to 30.78%. In terms of cost ratio, the company's expense ratio also increased by 0.03 pct to 19.49% during 2023. Among them, sales expenses rate and management expense ratio increased year on year, and financial expenses rate and R&D expenses rate decreased year on year.
Focus on high-quality development, and sales payback/profitability/operating risk control are all improving. In terms of sales repayment, in 2023, the company received 78.276 billion yuan in cash from sales of goods and services, with a repayment rate of 99.38%, maintaining a good level of repayment. In terms of profitability, gross profit margin and net interest rate have both increased due to improvements in domestic and foreign market structures and product structures and the promotion of cost reduction and efficiency measures. In terms of operating risk control, despite tight capital and increased repayment difficulties in the downstream construction machinery market, the overdue rate rate of the company's major product divisions is still kept at a low level, and the overall scale and quality of foreign payments are maintained at a good level.
Internationalization is progressing smoothly, and Indonesia's first overseas “lighthouse factory” is expected to bring new growth points.
In 2023, the company achieved international sales revenue of 43.258 billion yuan, an increase of 18.28%; international revenue accounted for 60.48% of the main business revenue, an increase of 14.78 percentage points over the previous year. At the same time, the company has comprehensively strengthened its global R&D capabilities, including strengthening electrification and intelligent testing capabilities, investing in the construction of 8 major trial production centers, and continuously improving the level of digital and intelligent R&D. In 2023, 35 new products were launched in Europe and the US, and 15 new models of large-scale equipment were launched overseas. Furthermore, in 2023, the company successfully designed and built the first overseas “lighthouse factory” in Indonesia to achieve full network connectivity and reduced production, which is expected to bring new growth points.
Profit forecasting and valuation
The company's 2024-2026 revenue is expected to be 783.83, 876.05, and 96.61 billion yuan, with year-on-year growth rates of 5.90%, 11.77%, and 10.28%; net profit to mother is 58.05, 71.00, and 8.373 billion yuan, with year-on-year growth rates of 28.22%, 22.30%, and 17.93%. The company's 2024-2026 performance corresponding PE was 24.35, 19.91, and 16.88 times, respectively. It was covered for the first time, and a “gain” rating was given.
Risk warning:
The construction machinery industry continues to decline; progress in internationalization falls short of expectations; competition increases risks.