There was a strong increase in performance in '23, and impairment charges were reduced. The company released its 2023 annual report, achieving operating income of 1,507 billion yuan, a year-on-year decrease of 17.46%, and net profit to mother of 161 million yuan, an increase of 43.82% year-on-year, after deducting non-net profit of 129 million yuan, an increase of 48.07% over the previous year. Among them, the company accrued asset impairment of 0.26 million yuan and credit impairment of 31 million yuan in 23 years, all down from 2022, but the accrued amount is still high. 24Q1 achieved operating income of 229 million yuan, -11.11% year-on-year, and net profit to mother of 3.1 million yuan, or -25.13% year-on-year.
Profitability levels have increased significantly, and cash flow has stabilized. The company achieved a net operating cash flow inflow of 287 million yuan in 2023, with a stable net inflow for many years. Looking at the profit level, the company's gross margin/net margin/ROE for 23 years was 32.22%/12.56%/10.57%, respectively, up 3.01/4.64/2.84pct from the previous year. The profit level increased significantly. On the one hand, it benefited from reduced impairment, and on the other hand, the company actively reduced its business scale, and improved project quality and profit levels.
Orders for prefabricated design increased, and EPC business contracted. By business, the company signed new orders of 1,554 billion yuan in the architectural design business in '23, up 2.46% year on year, achieving revenue of 9.07% year on year, gross margin of 35.06%, up 0.47pct year on year; of these, new prefabricated design orders were signed, accounting for 56.49% of architectural design business contracts, up 42.85% year on year, achieving revenue of 499 million yuan, down 8.93% year on year; cost consulting business signed new orders of 164 million yuan, down 22.63% year on year, achieving revenue A year-on-year decrease of 14.53%, a year-on-year decrease of 14.53%, a year-on-year increase of 3.83 pct; full-process engineering consulting and other businesses signed new orders of 37 million yuan, a decrease of 22.01% over the same period last year; general engineering contracting business and full-process engineering consulting business achieved revenue of 191 million yuan, a year-on-year decrease of 48.24%.
Profit forecasting and investment advice. The company will continue to build BIM forward design platforms such as Huayang Express Construction, and accelerate the integration of AI technology with the entire design process. The company's net profit for 24-26 is estimated to be 1.85/221/259 million yuan, respectively. Considering comparable company valuations and future performance growth rates, the company is given a PE valuation of 17 times in 24 years, corresponding to a reasonable value of 16.06 yuan/share, maintaining a “buy” rating.
Risk warning: Per capita output growth falls short of expectations; BIM falls short of expectations; offsite expansion is slowing down, etc.