Event: The company released its 2023 performance report. According to the company's preliminary accounting, in 2023, the company achieved revenue of 122.963 billion yuan, -12.88%; realized net profit of 1,029 billion yuan, +12.82% year over year; realized net profit without return to mother of 785 million yuan, +3.03% year over year (all of the above values are adjusted). 2023Q4 achieved revenue of 26.902 billion yuan, +2.77% year over year; realized net profit of 134 million yuan, +3.39% year over year; realized net profit after deduction of 82 million yuan, +0.38% year on year (all unadjusted).
Supply chain business is actively optimized, and industrial chain business drives profits upward. The company's revenue declined and profit increased in 2023. We believe that the main reason is that the supply chain business, which accounts for a large share of revenue, is facing insufficient demand and downward market pressure. Against this background, the company is actively trading high-value-added products to stabilize the company's “basic market.” At the same time, the steady development of the industrial chain business with a relatively low revenue share and high profit margin led to an increase in the company's overall profit. In 2023, the industrial chain sector vigorously explored the domestic market on the basis of stabilizing overseas markets, and further exploited its advantages and value through continuous product development and innovation and firm green development.
The industrial chain business 2024 ushered in a good start. In terms of the large consumer sector, since 2024, the company has doubled the number of orders received from customers such as Skechers and Semma, and achieved a significant year-on-year increase in spring and summer orders for outdoor sports and sunscreen clothing categories. It has established new cooperation and signed new orders with 6 brand customers. The orders have all entered the catch-up stage, laying the foundation for the steady development of domestic trade business throughout the year. Eton Kidd's business has signed new partnerships with 3 schools.
In terms of the environmental protection sector, since 2024, the company has successfully won bids for several PV operation and maintenance projects such as 160 MW in Lincang, Yunnan, adding more than 350 MW of new operation and maintenance, and more than 500 stable operation and maintenance projects, with an operation and maintenance capacity of over 2.5 GW. In the advanced manufacturing sector, the diesel generator business successfully signed a contract for the Saudi NEOM New Future City project. Since the beginning of the shipbuilding and shipping business, four ships have been successfully delivered and two construction contracts have been signed. Currently, orders for ships in operation have covered 2027.
Investment advice: The company has a central enterprise background, high dividends and undervaluation attributes are prominent, actively lays out businesses along the “Belt and Road”, and is optimistic about future business structure optimization to drive upward profits. We expect the company's net profit to be 10.29/11.66/1,323 billion yuan in 2023-2025, corresponding to PE 10.1/8.9/7.8X, covered for the first time, and given an “increase in wealth” rating.
Risk warning: commodity price fluctuations; exchange rate fluctuations; weak overseas demand.