1Q24 Results Exceed Our Expectations
The company announced 1Q24 results: revenue of 2,658 million yuan, +22.36% year over year; net profit to mother of 363 million yuan, +66.32% year over year; net profit after deducting non-return to mother of 341 million yuan, +86.96% year over year.
1Q24's performance exceeded our expectations. We believe that the main factors are: 1) the completion and delivery of major projects was accelerated in 1Q24, and the company signed new orders in 2023 (16.513 billion yuan, +36.22% year over year), supporting the gradual acceleration of revenue growth in 2024; 2) 1Q23's comprehensive gross margin was affected by fixed cost amortization and changes in product structure. The base was low, and 1Q24 gross margin improved significantly year-on-year.
Development trends
The 2024 business goals have been achieved steadily. The company plans to achieve revenue of 15 billion yuan in 2024, +20% over the same period, and 1Q24 achieved revenue of 2,658 billion yuan, +22.36% year over year, accounting for 17.72% of the annual target (1Q revenue in the 2020-2023 period averaged 16.63%), and the operating target was steadily implemented. Looking ahead to 2024, we believe that investment in domestic high voltage backbone networks will increase steadily, and Siyuan's basic market is expected to grow steadily; new energy investment will drive a high demand for supporting electrical equipment and complete station solutions, and Siyuan's share is expected to gradually increase. The industrial side market is driven by the steady growth policy, and the speed of project implementation may gradually accelerate; overseas power equipment demand is high and supply is tight. We are optimistic that the company's sales channels will continue to break through and diversification of products gradually deepening (in addition to main equipment such as high voltage switches and transformers, medium voltage switches, SVG, automotive electronics and other products will gradually expand overseas); company The 2024 plan is to add $20.6 billion in contract orders (excluding tax), +25% over the same period last year, demonstrating confidence in growth.
Increased profitability brings flexibility to profits. The 1Q24 company's comprehensive gross profit margin was 30.70%, up 4.49ppt year on year. The same period last year was affected by fixed cost amortization and product structure changes, and the base figure was low.
1Q24's sales/management/R&D/finance expense ratios were 5.03%/2.98%/8.03%/0.24%, respectively, -0.08/+0.39/+0.52/-0.54ppt, totaling +0.28ppt year-on-year. The company continues to increase investment in R&D and actively build a forward-looking, mature and competitive technology platform and product platform. We estimate that if the impact of equity incentive expenses is excluded, the company's expense ratio will drop slightly year-on-year during the 1Q24 period, and the overall cost control will be good. The company's net interest rate/net profit margin for 1Q24 was 13.67%/12.83%, respectively, +3.61/+4.43ppt. We are optimistic about the profit elasticity brought about by the company's increased profitability in 2024:1) The increase in the share of overseas revenue will help the overall gross margin to move upward. In 2023, the company's overseas gross profit margin was 38.55%, higher than domestic 10.95ppt. We estimate that the gross margin of overseas stand-alone sales will exceed 40%.
2) Reduce internal costs and increase efficiency, and the company continues to strengthen project delivery management and supply chain management.
Profit forecasting and valuation
We maintain our 2024/2025 net profit forecast of $2,064,551 million. The current stock price corresponds to the 24/25 25/20 price-earnings ratio. Maintaining an outperforming industry rating, considering the recent upward shift in the industry valuation center, the target price was raised 10.6% to 76.0 yuan, corresponding to the 29/23 times price-earnings ratio in 24/25. The current stock price still has room for an upward trend of 15.6%.
risks
Grid investment fell short of expectations, raw material prices rose, and overseas market development fell short of expectations.