Event: The company publishes its 2023 annual report.
Non-net profit after deduction increased rapidly, and the amount of new contracts signed for overseas projects increased by more than 40%. In 2023, the company achieved operating income of 758.676 billion yuan, a year-on-year increase of 5.10%, net profit to mother of 23.812 billion yuan, an increase of 23.61% year-on-year, and net profit after deduction of 21.655 billion yuan, an increase of 58.18% over the previous year. By business type, infrastructure construction business, infrastructure design business, dredging business, and other businesses were 665.866 billion yuan, 47.261 billion yuan, 53.444 billion yuan, and 19.270 billion yuan, respectively, +5.24%, -6.00%, 4.92%, and 6.10%, respectively. In 2023, the company signed a new contract amount of 1,753.215 billion yuan, an increase of 13.68% over the previous year, and achieved the annual target of 103.53% (an increase of 9.8% over the 2022 new contract amount of 1,542.256 billion yuan, as reviewed and approved by the board of directors). Among them, infrastructure construction business, infrastructure design business, dredging business and other businesses were 1,558.482 billion yuan, 55.972 billion yuan, 119 billion 19,193 billion yuan, and 19.568 billion yuan respectively, up 14%, 1.95%, 11.76%, and 43.53% year-on-year respectively. In the infrastructure construction business, port construction, urban construction, and overseas projects increased by 10.20%, 16.78%, and 41.45%, respectively, over the same period last year, while road and bridge construction and railway construction declined year-on-year.
Gross margin increased slightly, and cash flow improved substantially. The company's gross margin in 2023 was 12.59%, up 0.94 pct year over year. Among them, the gross profit margin of the infrastructure construction business was 11.57%, up 0.97 pct year on year, mainly due to increased contributions from overseas business and domestic cash exchange projects and improved project management level; the gross profit margin of the infrastructure design business was 18.58%, up 1.98 pct year on year, mainly due to the impact of structural adjustments in the design business; and the gross margin of the dredging business was 13.11%, a slight decrease of 0.24 pct. The company's net operating cash flow in 2023 was 12.07 billion yuan, an increase of 960.5% over the previous year, mainly due to the company's strengthened cash flow management and increased asset market vitality, and increased project payback.
Deepen the layout of urban villages and jointly build the “Belt and Road” with high quality. The company has comprehensively deepened the layout of urban villages. It has signed a number of large-scale urban complex projects such as the urban renewal of Henggou Village in Haikou City - one of the first pilot projects for urban renewal in Haikou City, and the “urban village” renovation project in Fengxi Community, Huaxin Town, Qingpu District, Shanghai. The area development model continues to mature, and the scale of operation continues to expand. During the reporting period, based on a global perspective, the company accurately connected with the “Belt and Road” initiative deployment, made every effort to promote transportation infrastructure connectivity and people's livelihood improvement, and actively contributed to Chinese wisdom and China's solutions. In 2023, the amount of new contracts signed by the company for overseas business was 319.746 billion yuan (about US$47.526 billion), an increase of 47.5% over the previous year, accounting for about 18.24% of the new contract amount signed by the company.
In 2023, the company signed a new contract amount of US$38.761 billion in the “Belt and Road” joint construction country. Among them, the Middle East region has signed new contracts worth 3.89 billion yuan. Since the joint “Belt and Road” initiative was introduced, a total of 234.758 billion US dollars of new contracts have been signed. The Kanapuri River Tunnel in Bangladesh was officially opened to traffic, the first anniversary of the safe operation of Cambodia's Golden Port Expressway. Nigeria's Lekki Port was opened and operated; construction of the main structure of the pier berth of the Qiankai Port Project in Peru was completed ahead of schedule, construction of Bogotá Metro Line 1 began, and a series of “Belt and Road” brand projects were completed.
Investment advice: The company's 2024-2026 revenue is expected to be 825.352 billion yuan, 895.605 billion yuan, and 966.556 billion yuan, respectively, up 8.79%, 8.51%, and 7.92% year on year, net profit to mother is 25.924 billion yuan, 27.883 billion yuan and 30.283 billion yuan respectively, up 8.87%, 7.52% and 8.65% year on year, EPS is 1.59 yuan/share, 1.71 yuan/share, 1.86 yuan/share, respectively. The PE corresponding to the current stock price is 5.17 times, 4.81 times, and 4.42 times, maintaining the “recommended” rating.
Risk warning: Risk of order fulfillment falling short of expectations; risk of accounts receivable recovery falling short of expectations.