Event: The company released its 2023 annual report and 2024 quarterly report, and its performance continued to grow rapidly.
1) In 2023, the company achieved revenue of 12.46 billion yuan, +18.25% year on year; net profit of 1,609 billion yuan, +24.93% year on year; net profit to mother of 1,559 billion yuan, +27.76% year on year; deducted non-net profit of 1,421 billion yuan, +21.64% year over year. Gross profit margin 29.5%, +3.17pct; period expense ratio 14.88%, +2.13pct year on year; net profit margin 12.91%, +0.69pct year on year.
2) Corresponding to 2023Q4 revenue of $38.79 billion, +9.72% year on year; net profit of 421 million, -8.62% year on year; net profit to mother of $411 million, -5.47% year on year; deducted non-net profit of 310 million, -13.65% year on year. Gross profit margin 28.15%, +1.22pct year on year; period expense ratio 16.44%, +0.73pct year on year; net profit margin 10.84%, -2.18pct year on year.
3) With 2024Q1, the company achieved revenue of 2,658 million yuan, +22.36% year over year; net profit of 362 million yuan, +57.12% year over year; net profit to mother of 363 million, +66.32% year over year; deducted non-net profit of 341 million, +86.96% year over year. The gross profit margin was 30.7%, +4.49pct; the period expense ratio was 16.29%, +0.28pct year on year; the net profit margin was 13.6%, +3.01pct year on year.
Gross margin rebounded in 2023. Among them, the profitability of switches increased significantly; revenue from coil and reactive power compensation grew faster:
In 2023, the company's total revenue was 12.460 billion, +18.25% year on year; gross profit margin was 29.5%, +3.17pct year on year. Among them, switch revenue was 5.582 billion yuan, gross profit margin of 33.45%, +6.74 pct year on year; coil revenue of 2,747 billion, +23.13% year on year, gross profit margin 29.66%, year on year +0.96pct; reactive power compensation revenue of 1.85 billion yuan, +39.32% year on year, gross profit margin 24.92%, +0.19 pct year on year; smart equipment revenue of 1.05 billion yuan, up 6.61% year on year, gross profit margin of 34.01% year on year, +1.87pct year on year; general engineering contract revenue 924 million, up 23.44% year on year, gross profit margin 12.78%, +1.01 pct year on year.
Benefiting from the promotion of the company's high-voltage grade products and the acceleration of overseas expansion, the company continues to optimize operating processes, improve management efficiency, and establish cost advantages. It is expected that there is still room for improvement in the company's profitability.
2024Q1 had a good start, and revenue and profit grew rapidly:
2024Q1 achieved revenue of 2,658 billion yuan, +22.36% year over year; gross profit margin of 30.7%, +4.49pct year over year. It is expected to be mainly due to the increase in revenue from switches and related products, and the low base in the first quarter, which is easily affected by the confirmation of individual projects.
Optimistic about overseas market construction and new product innovation to accelerate growth:
The company has been deeply involved in overseas markets for many years. In overseas markets, power transmission and distribution equipment has been in operation for many years in regions with developed electricity such as Europe and North America, and there is plenty of room for renovation and replacement; power infrastructure construction in Southeast Asia, the Middle East, Africa and other regions is lagging behind, and there are large opportunities for new construction business.
The company actively explores new business opportunities such as flexible DC transmission, energy storage, static synchronous cameras, automotive electronics, medium voltage switches, bushings, intelligent operation and maintenance, and low voltage switches to ensure long-lasting leading growth momentum in the industry.
The company has sufficient orders in hand:
The company added 16.513 billion new orders in 2023 (excluding tax), up 36.22% year on year; its domestic orders were 12.5 billion, +37% year over year; overseas orders were 4.01 billion, +34% year over year. The company set a business target for 2024 to achieve new contract orders of 20.6 billion yuan (excluding tax), an increase of 25% over the previous year; to achieve operating income of 15 billion yuan, an increase of 20% over the previous year.
Investment advice: The company's electricity transmission and transformation business has accumulated deep, and the network is expected to maintain a steady growth rate with the industry, and is optimistic that overseas market construction and new product innovation will accelerate growth. We adjusted the company's 2024-2026 revenue forecast to 165.6/204.8/25.15 billion (previous value was 165.1/201.8 billion for 2024-2025, additional 2026 forecast), with a year-on-year increase of 32.9%/23.71%/22.78%; net profit to mother of 21.3/26.1/3.24 billion (previous value 2024- ($21.9/2.72 billion in 2025, plus 2026 forecast), up 36.4%/22.7%/24% year on year. The current stock price corresponds to PE25/20/16 times, maintaining a “buy” rating
Risk warning: Grid growth falls short of expectations, overseas market demand falls short of expectations, industry competition intensifies.