Description of the event
The company released its 2023 annual report and 2024 quarterly report. In 2023, it achieved revenue of 1.7 billion yuan, an increase of 3% over the previous year, and net profit of 100 million yuan, a year-on-year decrease; 2024Q1 achieved revenue of 120 million yuan, a year-on-year decrease of 75%, and net profit of 70 million yuan, a year-on-year decrease of 10%.
Incident comments
On a full-year basis, the company's revenue in 2023 increased year on year. The gross margin was about 10%, down 5 pct year on year, and the cost ratio for the period was about 6.6%, up about 3 pcts year on year. Among them, the company's sales expense ratio was 0.57%, which was basically the same as the previous year; the management expense ratio, financial expense ratio, and R&D expense ratio were 4.97%, -0.41%, and 1.48%, respectively, up 1.3 pct, 1.4 pct, and 0.7 pct year-on-year respectively. The company calculated asset impairment and credit impairment at 110 million yuan and 70 million yuan respectively, and the final net profit was lost. Looking at specific business segments: 1) Manufacturing sector: The company achieved revenue of about 1,636 billion yuan, an increase of about 3% over the previous year, mainly due to the year-on-year increase in shipments; 2) Power generation business: The company achieved investment income of about 0.2 billion yuan. Looking at 2023Q4 alone, the company achieved revenue of 130 million yuan, a year-on-year decrease of 72%. Accumulated asset impairment and credit impairment totaled 110 million yuan, resulting in a loss in net profit.
On a quarterly basis, the company achieved revenue of about 120 million yuan in 2024Q1, a year-on-year decline. It is estimated mainly because Q1 is the traditional low season of sea breezes, compounded by the high base caused by the low season in 2023Q1. The company achieved gross margin of about 5.05%, a year-on-year decrease of 10 pct. At the same time, it recovered 60 million yuan in credit impairment, obtained wind farm investment income of about 55 million yuan, and finally achieved net profit of 70 million yuan, a year-on-year decrease.
In terms of other financial indicators, the company's capital expenditure for 2023 and 2024Q1 was 950 million yuan and 250 million yuan respectively, indicating that the company is actively developing production capacity; contract liabilities were 70 million yuan and 160 million yuan respectively. The 2024Q1 contract debt increased significantly compared to the end of 2023, reflecting strong demand for downstream sea breezes.
Looking ahead, the installed sea breeze is expected to increase to 10 GW in 2024. The company is actively promoting production capacity construction, which is expected to fully benefit from domestic and foreign ocean wind emissions. The company's net profit to mother is estimated to be about 530 million yuan in 2024, corresponding to about 20.5 times PE. Maintain a “buy” rating.
Risk warning
1. The development speed of the sea breeze industry falls short of expectations;
2. Profitability falls short of expectations due to increased competition in the industry.