Incident: In 2023, the company achieved operating income of 6.652 billion yuan, a year-on-year increase of 16.30%; net profit to mother of 310 million yuan, an increase of 50.23%; net profit after deducting net income of 278 million yuan, an increase of 66.42% over the previous year. The company's revenue for the first quarter of 2024 was 1,239 million yuan, an increase of 2.30%; net profit to mother was 55 million yuan, an increase of 6.61%; net profit after deducting non-return to mother was 55 million yuan, an increase of 10.00%. The reviews are as follows:
General engineering contracting revenue grew rapidly, and Q4 revenue and profit grew rapidly. By industry, the company's general engineering contracting, design business, supervision business, and other main businesses achieved revenue of 46.71, 12.90, 4.10, 1.57, and 106 million yuan respectively, up 23.63%, -1.20%, -9.27%, -4.15%, and 904.29%, respectively. By region, domestic and overseas revenue reached 56.41 billion yuan and 1,011 billion yuan respectively, an increase of 15.68% and 19.94%, respectively. On a quarterly basis, the company's 2023Q1, Q2, Q3, and Q4 revenue increased 9.78%, 8.79%, 13.41%, and 27.44%, respectively. Net profit to mother increased by 31.90%, 15.11%, 0.70%, and 252.01%, respectively. Net profit after deducting net income to mother increased 25.68%, 7.49%, -13.40%, and 1203.92%, respectively; single quarterly net interest rates were 4.28%, 5.04%, 4.68%, and 4.61%, respectively.
There has been an increase in gross margin, an increase in net profit margin, a decrease in impairment, and an increase in net operating cash outflow. In terms of gross margin, gross margin increased 1.27 pcts to 14.56% in 2023. Among them, gross margins for general engineering contracting, engineering design, engineering supervision, and engineering consulting increased 2.71, 0.06, -0.72, and 5.41 pcts, respectively. In terms of the period cost ratio, the cost rate for the 2023 period also increased by 1.39 pcts to 8.67%, of which the sales expense ratio increased 0.21 pcts to 0.66%; the management cost ratio (including R&D expenses) increased by 0.54 pcts to 8.76%; and the financial expenses ratio also increased by 0.65 pcts to -0.75%. The total impairment of asset+credit was $0.23 billion, a year-on-year decrease of $81 million. In terms of net interest rate, net interest rate increased 1.05 pct to 4.67% in 2023. The net operating cash outflow in 2023 was 237 million yuan, and the outflow increased by 237 million yuan; of these, revenue decreased by 28.38 pcts to 91.12%, and current payments increased 4.59 pcts to 78.81% compared to the same period. In 2024Q1, gross margin increased 1.07 pcts to 14.65%, and the cost ratio increased 1.43 pcts to 9.34% during the period. In addition, asset impairment and credit impairment totaled 0.02 billion yuan, a year-on-year decrease of 0.05 billion yuan; overall, net profit margin increased 0.18 pcts to 4.46%; net operating cash flow inflow of 165 million yuan, and inflows increased by 509 million yuan.
New orders declined under a high base, and new orders in the household chemicals, new energy materials, and pharmaceutical industries grew at a high rate. The company signed a new order of 8.016 billion yuan in 2023, a decrease of 19.22%. By industry, the company signed new orders of 17.11, 13.88, 12.37, 11.39, 8.26, 8.21, 2.89, 1.71, 433 million yuan for pulp and paper, household chemicals, food fermentation, new energy, new materials, civil construction, environmental protection, municipal administration, pharmaceuticals and other industries, up -49.93%, 101.50%, -39.81%, 70.14%, -24.46%, -40.30%, 26.20%, 172.51%, 30.62%, and -19.22%, respectively. By region, new domestic and overseas orders amounted to 6.710 billion yuan and 1,306 billion yuan, a decrease of 16.69% and 30.12%, respectively.
Profit forecasting and ratings. The leader in the whole process of the light industry is optimistic about the company's future growth prospects. We expect the company's 24-25 EPS to be 0.77 and 0.92 yuan, respectively, giving a 24-year price-earnings ratio of 20-22 times, a reasonable value range of 15.40-16.94 yuan, and maintaining a “superior to market” rating.
Risk warning. Refund risk, business development risk, policy risk.