Description of the event
In 2023, the company achieved operating income of 1,277 billion yuan, an increase of 44.33%; attributable net profit of 174 million yuan, an increase of 11.04% year on year; net profit after deduction of 168 million yuan, an increase of 11.04% year on year. In Q1 2024, the company achieved operating income of 288 million yuan, a year-on-year increase of 42.42%; attributable net profit of 0.3 billion yuan, an increase of 5.52% over the previous year; and net profit after deduction of 29 million yuan, an increase of 12.94% over the previous year.
Incident comments
The ground-based treatment business continued to grow at a high rate in 2023. The company achieved revenue of 1,277 billion yuan in 2023, a year-on-year increase of 44.33%. By industry, the revenue growth rates of foundation treatment projects and pile foundations were 30.93% and 149.33% respectively, and the main business continued to grow at a high rate. By region, the company's share of overseas revenue in 2023 reached 74.08%, an increase of 15 pcts over the same period last year. Revenue of 288 million yuan was achieved in Q1 2024, an increase of 42.42% year over year.
Gross margins were under pressure in 2023, and financial expenses dragged down expense ratios. The company's comprehensive gross profit margin in 2023 was 34.26%, down 2.08pct year on year. Looking at the fourth quarter, the company's comprehensive gross profit margin was 36.80%, up 12.19pct year on year; in terms of cost ratio, the company's expense ratio for 2023 was 15.74%, up 1.04pct year on year. Although the expense ratio has not changed much, due to rapid revenue growth, there has actually been a significant increase on the cost side. Among them, changes in sales expenses are mainly due to global development and domestic and foreign business growth; changes in management expenses are mainly due to increased management costs due to share payments; changes in financial expenses are mainly due to a decrease in exchange rate changes and a decrease in current interest income due to increased purchases of transactional financial assets.
New signings came under pressure in the second half of '23, which led to a year-on-year decline in new signings throughout the year. At the order level, the total number of new orders signed by the company in 2023 was about 1,062 million yuan, a year-on-year decrease of 34%, with 210 million yuan in China and 852 million yuan overseas. Looking at the split, the main reason is that the company was under pressure to sign new contracts in the second half of the year. Combined with the impact of the high base in the second half of last year, there was a year-on-year decline. In addition, the total amount of orders the company had in hand at the end of the period was RMB 890 million. Among them, the amount of the project that has been signed but has not yet started is 100 million yuan, and the unfinished portion of the project under construction is worth 790 million yuan, and there are plenty of orders in progress.
Equity incentive fees cannot hide the company's high performance, and we continue to pay attention to the growth opportunities of the Middle East+Southeast Asia market under the Belt and Road Initiative.
Considering that the company implemented the 2023 restricted stock incentive plan and employee stock ownership plan, the share payment fee was 41 million yuan. After deducting the impact of this fee, net profit not attributable to mother was 209 million yuan, a year-on-year growth rate of 38.19%. The high increase in performance is due to the rapid development of infrastructure in the two major regions of the company's layout: ① The relevant countries in the Middle East region have strong financial strength, but overall infrastructure construction is lagging behind, and investment demand is strong. For example, the UAE will invest about 11 billion US dollars to build low-carbon electricity and seawater desalination infrastructure by 2030; Egypt proposed a “new administrative capital” plan; Kuwait proposed the “New Kuwait Vision 2035”; and Saudi Arabia proposed the “2030 Vision” plan to accelerate the construction of related infrastructure. ② Southeast Asia and other countries have launched medium- to long-term infrastructure plans. Take Indonesia as an example. According to the “2020 2024 Mid-Term National Development Plan” issued by the local government, infrastructure construction is clearly a priority development goal. Indonesia's current capital requirements for infrastructure construction plans have reached 450 billion US dollars. According to Fitch's latest report, Indonesia's infrastructure sector will grow 4.7% year over year in 2023, and is expected to grow 5.2% year over year in 2024, with an average growth of 6.1% in 2025-2027. Meanwhile, according to research from Indonesia's Bandung Institute of Technology, 1/4 of the Indonesian capital will sink into the sea in 2050. The Indonesian parliament re-approves the capital relocation bill in 2022, which will provide an important impetus for the medium- to long-term development of the construction industry.
Risk warning
1. The technological leadership fell short of expectations, and the competitive barriers of “high vacuum” series patented technology were broken through; 2. The signing of new orders for Saudi landmark projects fell short of expectations.