Description of the event
The company achieved operating income of 265.011 billion yuan in the first quarter, a year-on-year decrease of 2.56%; attributable net profit of 7.481 billion yuan, a year-on-year decrease of 5.04%; and net profit after deduction of 7.169 billion yuan, a decrease of 3.30% year-on-year.
Incident comments
Q1 Revenue fluctuated, leading to a year-on-year decline in performance. The company achieved operating income of 265.011 billion yuan in the first quarter, a year-on-year decrease of 2.56%; attributable net profit of 7.481 billion yuan, a year-on-year decrease of 5.04%; and net profit after deduction of 7.169 billion yuan, a decrease of 3.30% year-on-year.
Q1 New orders declined year over year. Looking at the order structure, design consulting signed 7.500 billion yuan, down 3.1% year on year, 470.120 billion yuan, down 7.1% year on year, equipment manufacturing signed 14.470 billion yuan, down 10.7% year on year, characteristic real estate signed 6.730 billion yuan, down 60.5% year on year, asset management signed 12.50 billion yuan, down 70.1% year on year, resource utilization new sign of 6.130 billion yuan, decrease 6.6% year on year, finance and trade, 18.040 billion yuan, up 4.8% year on year. 86.60 billion yuan, an increase of 53.9% over the same period last year.
Both gross margin and expense ratio declined year on year, and impairment narrowed year over year. The company's comprehensive gross profit margin for the first quarter was 8.58%, down 0.33 pct year on year. In terms of cost ratio, the company's expense ratio for the first quarter was 4.73%, down 0.01pct year on year. Among them, sales, management, R&D and finance expenses changed -0.05, 0.16, -0.10, and -0.03pct to 0.51%, 2.53%, 1.31% and 0.39% year on year, respectively. The impairment was narrower compared to the first quarter of last year. Among them, asset impairment losses were 83 million yuan, a year-on-year decrease of 227 million yuan, and credit impairment losses of 5.82 million yuan. 100 million yuan, a year-on-year decrease of 214 million yuan. Taken together, the company's net attributable interest rate for the first quarter was 2.82%, down 0.07pct year on year. After deduction, net interest rate attributable to the company was 2.71%, down 0.02pct year on year.
Cash flow Q1 outflows increased year over year, and revenue ratio decreased year over year. The company's net cash flow from operating activities in the first quarter was 68.065 billion yuan, with a year-on-year increase of 30.41 billion yuan. The revenue ratio was 98.53%, a year-on-year decrease of 5.53 pct; the reasons for the fluctuation in cash flow:
1) Centralized payment of project payments, labor payments and materials before the Spring Festival; 2) Due to financial constraints of some project owners, repayment was delayed. At the same time, the company's balance ratio increased by 0.93 pct to 74.64% year on year, and the number of accounts receivable turnover days increased by 13.29 to 58.03 days year on year.
Pay attention to the continued progress of state-owned enterprise reforms and the revaluation of the company's resources and business values. Looking at the whole year, state-owned enterprise reforms are being implemented at an accelerated pace and infrastructure needs are resilient. At the policy level, 2024 is a critical year for state-owned enterprise reform, deepening and upgrading, and an aggressive year. Market value management assessments are expected to be gradually implemented in the near future, and further reform measures may be gradually introduced in the future. On a fundamental level, the issuance of Q2 special bonds is expected to accelerate. Coupled with subsequent support from trillions of special treasury bonds, infrastructure demand will be resilient throughout the year. In terms of the company's own resource business, it is currently wholly owned, controlled or invested in the construction of 5 modern mines at home and abroad, namely Heilongjiang Luming Molybdenum Mine, Congo (Gold) Lusha Copper-Cobalt Mine, MKM copper-cobalt mine, Huagang SICOMINE copper-cobalt mine, and Ulan lead-zinc mine in Mongolia. The overall development and sales of the company's mineral resources remained stable in 2023. Looking ahead to 2024, it is expected that steady infrastructure growth will still contribute to order growth, driving the company's continued steady growth, and the resource business is also expected to provide valuation flexibility. The company's net profit for 2024-2026 is estimated to be 373.37, 407.75, and 44.569 billion yuan, corresponding to PE valuations of 4.36, 3.99, and 3.65 times, maintaining a “buy” rating.
Risk warning
1. Policy progress falls short of expectations;
2. Prices of raw materials fluctuate greatly.