Description of the event

In Q1 2024, the company achieved operating income of 14.125 billion yuan, a year-on-year increase of 5.34%; attributable net profit of 444 million yuan, an increase of 3.06% over the previous year; and net profit after deduction of 426 million yuan, an increase of 10.19% over the previous year.

Incident comments

Shanghai's fixed investment volume was under pressure in the first quarter, and the company's revenue was still growing. The company reached 14.125 billion yuan in Q1 2024, a year-on-year increase of 5.34%. Looking at the situation in Shanghai, the investment growth rate declined year-on-year in the first quarter. Shanghai's fixed asset investment increased 9.2% year-on-year in the first quarter, down 4.4 pcts from the 2023 growth rate.

R&D expenses continue to rise, and gross margins are still improving. The company's comprehensive gross profit margin for Q1 2024 was 12.54%, up 1.61 pct year on year. Looking at the first quarter, the company's comprehensive gross profit margin was 12.54%, up 1.61 pct year on year; in terms of cost ratio, the company's expense ratio for the 2024 Q1 period was 10.35%, up 0.85pct year on year. Among them, sales, management, R&D and finance expenses changed by 0.00, 0.11, 1.15, and -0.42pct to 0.01%, 3.61%, 3.84%, and 2.88% year on year, respectively.

Taken together, the company's net vested interest rate for Q1 in 2024 was 3.14%, down 0.07pct year on year, and 3.02% net vested interest rate after deduction, up 0.13pct year on year.

The payout ratio has been further improved. The company's net cash flow from Q1 operations in 2024 was 3,908 million yuan, with a year-on-year increase of 239 million yuan, a year-on-year increase of 129.18%, an increase of 11.49 pcts over the previous year. At the same time, the company's balance ratio increased 1.36 pcts to 77.53% year on year, and the number of accounts receivable turnover days decreased by 23.68 to 128.87 days year on year.

New signings in Shanghai are booming, and the new signing business is diversifying. According to the region, the increase in the amount of new contracts signed by the company in 2023 was mainly due to the company's deep cultivation in Shanghai. The amount of new contracts signed in Shanghai was 44.15 billion yuan, an increase of 31.3% over the previous year, accounting for 53.9%. By order type, the top three new contracts signed by industry were rail transit, municipal engineering and road engineering businesses. The growth rates of the three were 14%/18%/-36%, respectively. In addition, the company's new energy engineering business was very impressive, with an increase of 106%, mainly due to the company's new energy business layout for energy storage, wind power, etc.

High dividends return investors, and the company's current shareholders+data elements have yet to be re-evaluated. The company's cumulative dividend in 2023 was 1,038 million yuan, with a dividend rate of 35%. The company responded to the call of the State Assets Administration Commission and achieved dividends twice a year for the first time since listing. It is expected that it will continue to pay 2 dividends throughout the year in the future, and the dividend rate is expected to remain high. In terms of investment income, out of the company's Q1 investment income of 357 million yuan in 2024, we estimate that XCMG's earnings could reach about 300 million yuan based on the company's shareholding and stock price increases, which is more in line with the company's investment income. In terms of data elements, the “Urban Knowledge of Time and Space - Low Speed Work Vehicle Time and Space” data product operated by the company's city successfully completed the first transaction in 2023, opening up monetization channels, and considering the continuous accumulation of rich underlying data assets throughout the company's construction process. Looking ahead, it is expected that Dongfeng will use the policy of authorizing and opening up public data to achieve a revaluation of its own value. In addition, the company is deeply involved in Shanghai Highway operation and has information system capabilities. If the Shanghai regional low-altitude economic policy is promoted, the company is also expected to benefit. Maintaining a “buy” rating

Risk warning

1. The operator of the parking platform in Shanghai has changed; 2. The ownership of data elements is unclear; 3. Policy progress falls short of expectations; 4. The data factor market transaction volume has not expanded as fast as expected.