Description of the event

The company released its 2023 annual report and 2024 quarterly report. In 2023, it achieved revenue of 1.05 billion yuan, an increase of 38.17% year on year; net profit to mother of 207 million yuan, up 33.33% year on year; net profit after deducting non-return to mother was 176 million yuan, an increase of 38.00% year on year.

23Q4 achieved revenue of 405 million yuan, up 70.48% year on year; net profit to mother was 88 million yuan, up 281.28% year on year; net profit after deducting non-return to mother was 73 million yuan, up 358.16% year on year. 24Q1 achieved revenue of 241 million yuan, up 37.24% year on year; net profit to mother was 58 million yuan, up 285.87% year on year; net profit after deducting non-return to mother was 52 million yuan, up 349.93% year on year.

Incident comments

The performance exceeded expectations, and overseas revenue increased sharply. In 2023, the company's product shipments and installations continued to grow, and acceptance was accelerated in 23Q4 and 24Q1. At the same time, the company's overseas shipments increased a lot, Q4 revenue increased by more than 70%, and Q1 revenue increased by more than 30%; furthermore, the company's expense growth was effectively controlled, and the net interest rate continued to rise due to large-scale effects. In 2023, domestic market revenue was +15% to 553 million yuan, and overseas revenue was +74% year-on-year to 542 million yuan, accounting for nearly half. Overseas business continued to grow rapidly.

Improve products and services, and accelerate international layout. The company continues to strengthen its international layout and actively integrate into the new development pattern of domestic and international markets; the company's American marketing and after-sales service network construction project has further promoted implementation, increasing the breadth and depth of customer coverage; in May 2023, the company established 3S American Engineering Services Co., Ltd., a wholly-owned second-level subsidiary, to further promote the company's overseas business development, expand the company's business scale, and enhance the company's profitability.

The field of non-wind power continues to expand, opening up a large space for safety equipment for aerial work. The company is market-oriented. In addition to the advantageous wind power field, new products such as intelligent safety protection equipment, high-altitude emergency equipment, industrial elevators, tower climbers, and ladder-guided material conveyors that the company has actively expanded have been developed and introduced to the market, further expanding the company's business scope and cultivating new profit growth points for the company's future continuous development. Currently, the company's tower cranes are cooperating with many domestic OEMs. With the expansion of the company's new products in the non-wind power field, the non-wind power business is expected to expand rapidly. Previously, Zhongji Equipment, a wholly-owned subsidiary of the company, planned to invest in the construction of the “Sino-Global Joint High-altitude Equipment R&D and Production Project Phase I” to promote the construction of product lines such as CAS automatic lifting systems (hoists, tower climbers), BMU (construction suspension platforms), and PPE (personal protective equipment) products. This will also further enrich the company's product structure and expand product application areas and market space.

According to recent tracking, various domestic and national ministries and departments have jointly launched the “Operation to Control the Wind in Thousands of Villages”. Decentralized wind power is expected to increase, and sea wind emissions are expected to increase; seabreeze construction costs in overseas, the United States and other places are gradually being resolved, and project restarts are accelerated; and the foundation for later installations is booming. We continue to be optimistic about the performance flexibility brought about by sea breezes and overseas. The non-wind power sector has had a broad market for a long time.

Maintain a “buy” rating. The company is a leader in wind power aerial work equipment. As domestic wind power hoisting continues to advance, the company's performance is expected to improve. In terms of profitability, gross margin is expected to increase as installed capacity is repaired and the share of overseas revenue increases.

In the medium to long term, overseas markets will continue to expand, and non-wind power sectors and aftermarket services are expected to open up room for growth. We expect the company's net profit to be RMB 280 million and RMB 360 million respectively in 2024-25, corresponding to the latest PE of 23 and 18 times, respectively, to maintain a “buy” rating.

Risk warning

1. Wind power installation falls short of expectations;

2. The risk of increased competition in the industry.