The performance was in line with expectations. The company's revenue in 2023 was 42,070 billion yuan, up 46.0% year on year; net profit to mother was 1,080 billion yuan, up 405.5% year on year; net profit after deducting non-return to mother was 1,042 billion yuan, up 464.2% year on year. Revenue for the fourth quarter was 11.306 billion yuan, up 77.6% year on year, up 6.9% month on month; net profit to mother was 425 million yuan, up 396.6% year on year, up 166.6% month on month; net profit after deducting non-return to mother was 404 million yuan, up 370.9% year on year, up 176.5% month on month. Benefiting from positive factors such as macroeconomic improvements, recovery in freight demand, strong export momentum, and strong demand for heavy gas trucks, the heavy truck industry's boom picked up markedly in 2023; the company accelerated product optimization and structural adjustments and implemented precise marketing strategies, and the level of performance improved markedly. The company plans to pay dividends of $0.462 per share to shareholders in 2023.
The gross margin improved as the industry recovered, and the expense ratio declined slightly. The gross profit margin for the full year of 2023 was 7.8%, up 1.7 percentage points year on year; the gross profit margin for the fourth quarter was 9.4%, up 5.9 percentage points year on year and 2.8 percentage points month on month. The fee rate for the full year of 2023 was 2.7%, a year-on-year decrease of 0.5 percentage points. Benefiting from increased revenue, optimization of institutional processes and marketing networks, and increased interest on capital deposits, the company's sales/management/R&D/finance expense ratios decreased by 0.1/0.1/0.2 percentage points year-on-year, respectively. Net cash flow from operating activities for the full year of 2023 was $2,113 billion, a year-on-year decrease of 69.9%, mainly due to an increase in procurement expenses and receivables financing in sales payments during the reporting period, as well as a decrease in tax rebates.
The heavy truck industry recovered in 23 years, and the company's market share increased. After a 22-year trough, the heavy truck industry achieved restorative growth and bottomed out in '23. According to the China Automobile Association, the heavy truck industry's sales volume (invoicing caliber) in 2023 was about 911,000 units, up 35.6% year on year. The industry sold 204,400 vehicles in the fourth quarter, up 37.2% year on year. In the context of the recovery of the heavy truck industry, A-share companies sold 127,500 heavy trucks in 2023; Sinotruk Group's heavy truck sales outperformed the industry and further increased its market share, achieving annual sales of 22.7 million units, an increase of 43.9% year on year; the market share reached 24.9%, up 1.4 percentage points year on year. The industry is expected to maintain a restorative growth trend in 2024, driven by increased demand for gas vehicles and replacement increases brought about by the “National 4” travel restriction policy.
Demand for heavy gas trucks continued to rise, and export sales reached new highs. Demand for gas vehicles was strong in 2023, and the industry's gas heavy truck terminal sales volume was 152,000 units, up 307.2% year on year. Among them, Sinotruk Group sold 26,900 heavy gas trucks throughout the year, up 287.6% year on year, with a market share of 17.7%. It is expected that the structural growth opportunities for heavy gas trucks brought about by the 2024 oil and gas price difference will continue. The company will seize the opportunity to closely focus on market demand and accelerate technological upgrades and product restructuring, and gas heavy trucks are expected to become an important growth point for the company in the future. The Group's export momentum is strong. Domestic heavy truck export sales in 2023 were 276,000 units, up 58.1% year on year; Sinotruk Group exported 130,000 heavy trucks, up 46.9% year on year. Export sales reached a record high, with an export market share of 47%. As an overseas leader, the company is deeply involved in overseas business, exports to more than 110 countries and regions around the world, and has built a strong distribution network. Demand in the overseas heavy truck market is expected to remain high in 2024, and the export business will continue to drive the company's sales growth.
Adjust revenue, gross profit margin, expense ratio, etc., and increase the 2026 forecast. The 2024-2026 EPS is 1.31, 1.62, and 2.04 yuan respectively (the original 24-25 EPS was 1.17 and 1.66 yuan). Based on the 24-25 PE valuation, it is 15 times the company's average PE valuation in 24 years, and the corresponding target price is 19.65 yuan, maintaining the purchase rating.
Risk warning
The heavy truck industry's sales volume is lower than expected, the company's heavy truck sales volume is lower than expected, the average price is lower than expected, and there is a risk of fluctuations in raw material costs.