Profitability picked up in the first quarter of 2024. ① Revenue for the full year of '23 was 4.813 billion yuan, +53.93% year-on-year, and net profit to mother was 292 million yuan, +6.37% year-on-year. 24Q1's revenue was 657 million yuan, -18.38% year-on-year, -64.20% month-on-month, and net profit of 55 million yuan to mother, -39.69% year-on-year and -2.90% month-on-month. ② The company's profit was under slight pressure throughout the year 23, and there was a recovery in 24Q1. The company's gross profit margin in '23 was 18.09%, -0.29pct year on year, net profit margin 6.11%, and -2.53 pct year on year. The 24Q1 gross profit margin was 20.12%, -2.00pct year on year, +4.36pct month-on-month, net profit margin 8.47%, -2.62pct yoy, and +5.16pct month-on-month, which showed some recovery.
23. The company's overseas + ocean wind business revenue increased year-on-year throughout the year, and the gross margin for overseas orders reached 29.33%. Land Wind (including concrete towers) /Sea Breeze and Offshore Engineering/Zero Carbon/Innovation and other revenues were $34.93/10.80/0.32/208 million yuan respectively, +31.08%/+13.84%/+442.31% YoY. The four business categories accounted for 72.59%/22.44%/0.66%/4.31%, respectively, accounting for -12.66pct/+9.80pct/-0.23pct/+3.09pct. 23. The gross margin of land wind (including mixed towers) /sea wind and offshore engineering was 18.98%/10.07%, respectively, +1.65pct/-8.73pct year-on-year. The gross margin for overseas orders/domestic orders was 29.33%/13.5%, +8.71 pct/-2.35pct; overseas/domestic revenue was 13.94/3.419 billion yuan, -15.77%/+132.31% year-on-year, mainly due to the successful commissioning of the Yangzhou production base, which specializes in export products, in 23, effectively releasing production capacity and promoting the expansion of high-quality overseas orders.
New overseas orders increased by 298.06% year-on-year in 24Q1, and there are plenty of orders in hand. For the full year of '23, the company added 1,525 billion yuan in overseas orders, +64.5% over the same period last year. 24Q1 added 522 million yuan in overseas orders, +298.06% year over year; as of March 31, 2024, the company had ongoing orders of 4.127 billion yuan, +15.01% year over year, and overseas orders of about 1.5 billion yuan, +68.92% year over year. The company plans to establish a European sales center and complete Taisheng Landao technical reform in order to better meet the needs of overseas customers.
23 The company's expense ratio was stable throughout the year, and R&D progressed far and wide. 23 For the whole year, the company's expenses rate for the period was 10.12%, +0.60pct. Financial expenses changed from profit of 128.573 million yuan in '22 to a loss of 51.11,182 million yuan, mainly due to exchange losses due to fluctuations in the US dollar exchange rate. As US dollar exchange losses decreased in 24Q1, financial expenses fell to 6.0872 million yuan, -62.69% year over year. At the same time, in '23, the company further expanded R&D investment, with R&D expenses +35.02% over the same period. It completed research and development of key technologies for the construction of complete infrastructure equipment for Shenyuan offshore wind farms and research and development of core key technologies for deep-sea floating wind power. We believe that as offshore wind power continues to develop in the deep sea, the company's key technical research, such as floating ocean wind infrastructure, will drive the reduction in the construction cost of deep-sea wind power while bringing it a competitive advantage.
Profit forecasting and valuation. The company is expected to achieve net profit of 5.36 billion yuan or 720 million yuan from 2024-2025, corresponding to EPS of 0.57 and 0.77 yuan/share. Considering the company's potential to export towers, referring to comparable company valuations, the company was given 15-19X PE in 2024. The reasonable value range was 8.55-10.83 yuan, giving it a “superior to the market” rating.
Risk warning. Risk of rising raw material prices; increased risk of competition; risk of wind power installations falling short of expectations.