分业务板块来看，发动机、Kion、法士特、陕重汽盈利能力同比回升，分别贡献归母净利润65.8/9.7/4.1/1.7 亿元， 同比增长140.5%/336.9%/210.4%/1764.7%。其中，发动机业务受天然气和大缸径发动机带动，盈利修复；Kion 叉车部门盈利能力改善，分别实现净利润和净利润率3.1 亿欧元和2.7%，同比+197.2%/+1.8pct；行业销量复苏，带动陕重汽、法士特单车盈利均修复至2905/957 元，同比+1186%/+118.5%。Key points of investment:
We believe that the main reason for the company's outstanding performance in 2023 is the rapid growth of the engine business driven by strong sales of heavy natural gas trucks, the volume of new business, and the profit recovery of subsidiaries in various sectors. Through historical performance comparison, we found that the profitability of subsidiaries in various business segments still has a lot of room to improve compared to historical levels. We are optimistic that heavy natural gas truck sales will continue to be strong in 2024, and the company's overall profitability will continue to increase.
The company's engine business recovered, and the multi-sector business resonated upward
By business segment, engine, Kion, Fastest, and Shaanxi Heavy Duty Truck's profitability rebounded year on year, contributing 65.8/9.7/4.1/170 million yuan to net profit to mother respectively, up 140.5%/336.9%/210.4%/1764.7% year on year. Among them, the engine business was driven by natural gas and large bore engines, and profits were recovered; the profitability of the Kion forklift division improved, achieving net profit and net profit margins of 310 million euros and 2.7%, respectively, +197.2% /+1.8pct; industry sales recovery drove the profits of Shaanxi Heavy Duty Truck and Fast Bike to both recover to 2905/957 yuan, +1186%/+118.5% YoY.
There is still room for improvement in the company's market share of natural gas engines, and the large bore business is expected to contribute to the future. Sales in the heavy truck industry are currently at a bottom-up stage. Combined with the accelerated elimination of heavy trucks in China 4 and below, there is still plenty of room for improvement in industry sales. Natural gas prices have declined, and the oil and gas price spread is better than the same period in 2023, providing a foundation for the growth in the penetration rate of heavy natural gas trucks, and the company's market share is expected to increase further. In the new business area, large bore products are fully stocked, and their technical strength and response speed are competitive compared to foreign investment. It is expected that they will continue to be replaced and contribute additional volume to the company.
Free cash flow reached a record high, and the dividend ratio is expected to continue to rise
The company's free cash flow (FCFF) in 2023 was $23.13 billion, an increase of $30.82 billion over 2022, a record high in recent years. Capital expenditure rose moderately, to 7.20 billion yuan in 2023, +8.5 pct year-on-year, in line with the growth rate of fixed assets and projects under construction. The total planned dividend amount for 2023 is 4.53 billion yuan, and the dividend payment rate is 50.2%, +104.2% /+5.0pct. The subsequent dividend ratio is expected to increase steadily under good cash flow conditions. The company's equity incentives are expected to increase sales margins, drive ROE growth to more than 15%, and raise the company's PB valuation to more than 2.5 times.
Profit Forecasts, Valuations, and Ratings
We expect the company's revenue for 2024-2026 to be 2165.1/242.6/258.50 billion yuan respectively, with year-on-year growth rates of 1.2%/12.1%/6.5%, net profit to mother of 115.4/139.2/15.62 billion, year-on-year growth rates of 28.0%/20.6%/12.3%, EPS of 1.32/1.59/1.79 yuan/share, respectively, and a 3-year CAGR of 20.1%. In view of the company's leading position in the industry and strong product competitiveness, based on comparable company valuations, we gave the company 16 times PE in 2024, with a target price of 21.16 yuan, maintaining a “buy” rating.
Risk warning: natural gas prices are rising; the recovery of the heavy truck industry falls short of expectations; the pace of exports is slowing down.
