The 23-year performance transition was smooth, and 24Q1 was affected by project delivery. In 2023, the company achieved revenue of 7.673 billion yuan (+0.76%), net profit attributable to mother of 828 million yuan (+3.43%), and net profit of non-return to mother of 786 million yuan (+1.36%). Of these, 23Q4 recovery was significant. With 2024Q1, the company achieved revenue of 1,019 million yuan (-22.98%), net profit attributable to mother of 12 million yuan (-83.22%), and net profit of 12 million yuan (-75.16%) after deducting non-return to mother. Revenue pressure for the first quarter was mainly due to a year-on-year decline in revenue from integrated collection and other businesses, as well as a late bid period for stock projects last year. The project was in the early stages during the reporting period, and confirmed revenue was limited.
Gross profit margin has rebounded steadily, and expense ratios have increased. The company's gross margin has shown a steady upward trend in recent years. In '23, the company's gross margin was 21.56%, an increase of nearly 1 percentage point over the previous year. Since the overall sales revenue in '23 was basically the same as in '22, the company's various expense ratios increased. The sales, management, and R&D expenses rates were 3.04%, 4.43%, and 3.79% respectively. In particular, the R&D expenses rate increased by 1.24 percentage points.
Digitalization of electricity continues to grow at a high level, and enterprise digitalization and cloud network infrastructure are still under pressure. The revenue from the electricity digitization business was 2,056 billion yuan, an increase of 24.46% over the previous year. The company's electricity marketing 2.0 related products achieved standardization of electricity marketing business and full business coverage, successfully supported the promotion and launch of 13 State Grid provincial companies, and ensured the stable operation of 19 State Grid provincial companies. In the field of distribution, the lean distribution cable management platform developed by the company was launched in 16 municipal companies of the State Grid Anhui Electric Power Company. The construction of intelligent distribution station building applications was completed based on the Anhui Distribution Network's one-map four-state platform. In terms of virtual power plants, a load aggregation platform was built based on e-sharing home products to efficiently support the completion of the first electricity demand response in Sichuan Province and reduce the peak load by 406,500 kilowatts; the green license trading system that supported construction totaled 236.387 million transactions throughout the year, accounting for 90% of the country's green certificate transactions during the same period, making it the green certificate trading platform with the largest transaction volume in China. The company's digital business revenue was 1,955 billion yuan, a year-on-year decrease of 4.59%. Cloud infrastructure revenue was 36.39 billion yuan, down 6.57% year on year.
The reform of the power system is expected to accelerate, and a new power system will become the key. In the context of power system reform, the widespread access of new energy sources places higher demands on the capabilities of traditional power systems, and has also opened up broad market space for many innovative technologies such as virtual power plants. The company's industrial chain layout focuses on all aspects of power generation, transmission, transformation, use, and adjustment, and the entire scenario of source network load storage, and all businesses are expected to fully benefit.
Risk warning: The macroeconomy affects downstream IT expenses such as power grids; related policies fall short of expectations.
Investment advice: First coverage, giving a “better than the market” rating. The company's net profit for 2024-2026 is estimated to be 1,03/11.52 billion yuan, corresponding to current PE 21/19/16 times, respectively. Considering that power system reform is expected to accelerate, the company, as a core manufacturer of information technology, is playing an increasing role in the power grid. The company is conservatively valued 24-26 times, and a reasonable valuation of 19.92-21.58 yuan is expected. The first coverage gave it an “superior to the market” rating.