Event: The company released its 2023 annual report.
Performance grew steadily, and revenue from planning consulting and engineering contracting increased by more than 50%. In 2023, the company achieved revenue of 2,573 billion yuan, up 3.92% year on year. Among them, survey and design, planning and consulting, and engineering contracting business accounted for 86.92%, 7.35%, and 5.64% of revenue, respectively, -1.51%, +53.88%, and +80.66% year on year; achieved total profit of 501 million yuan, surpassed 500 million yuan for the first time, up 9.15% year on year; achieved net profit of 439 million yuan, up 8.21% year on year; realized net profit of 432 million yuan, up 8.21% year on year; realized net profit of 432 million yuan, up 8.21% year on year; realized net profit of 432 million yuan, up 8.21% year on year %; Achieved net profit of 426 million yuan after deduction, an increase of 8.42% over the previous year.
Profitability increased, and net operating cash flow inflows decreased. In 2023, the company's gross margin was 37.23%, up 4.16pct year on year. Among them, the gross margin of the survey and design business was 38.87%, up 4.95pct year on year.
By region, Guangdong Province's domestic gross margin was 40.16%, up 6.89pct year on year, while Guangdong's external gross margin was 29.94%, down 2.74 pct year on year. The company's net profit margin in 2023 was 17.08%, up 0.68pct year-on-year.
The company's net operating cash flow in 2023 was 185 million yuan, a year-on-year decrease of 46.05%; the net cash flow from investment activities was -312 million yuan, an increase of 102.27% year-on-year, mainly due to the company's high expenditure on design and R&D buildings under construction, increased equipment investment, and increased foreign investment. The company's sales/management/finance/R&D expenses in 2023 were 562,184 million yuan, 172.6043 million yuan, -5.677 million yuan, and 1154.219 million yuan, respectively, compared with -5.12%/+2.40%/+72.92%/+3.36%, respectively. The increase in financial expenses was mainly due to a decrease in interest income and an increase in loan interest.
Benefiting from the “Strong Transportation Country” policy, the scope of business has been steadily expanding. Under the guidance of policies such as a “transportation powerhouse,” China's rail transit investment demand will continue to be released over a long period of time. The National Development and Reform Commission proposes to cultivate a modern metropolitan area in an orderly manner, develop intercity railways and urban (suburban) railways, and accelerate the construction of Beijing-Tianjin-Hebei, Yangtze River Delta, Guangdong-Hong Kong-Macao Greater Bay Area intercity railways and urban (suburban) railways; the “14th Five-Year Plan” issued by Guangdong Province proposes that 880 billion yuan will be allocated for rail transit infrastructure construction during the “14th Five-Year Plan” period. The operating mileage of urban rail transit operations and intercity railways in the province will increase from 1455 kilometers in 2020 to 2,500 kilometers in 2025. The development of rail transit in the metropolitan area brought new opportunities to the company. In 2023, the company fully and efficiently carried out local production tasks in Guangzhou to ensure the smooth opening of 4 key projects: Guangzhou Metro Line 5 East Extension Section and Line 7 Phase II, Guangzhou Baiyun Station Integrated Transportation Hub Project, and Xintang Station Integrated Transportation Hub Project; promoted external production projects in an orderly manner, and carried out 29 general contracting and design general contracting lines in 45 foreign cities in an orderly manner, as well as design tasks for 13 consulting lines. Participated in design consulting and management of the Macau East Line full-process consulting project, the renovation of the Alexandria streetcar in Egypt, and the design consultancy for the Bogotá Metro Line 2 project, and signed a friendly cooperation document with the Ho Chi Minh City Railway Management Committee in Vietnam to successfully expand new markets such as Hong Kong and Bogota, Colombia. Overseas expansion progressed steadily, and the scope of business expanded steadily.
Investment advice: The company's revenue for 2024-2026 is expected to be 2,942 billion yuan, 3.338 billion yuan, and 37.33 billion yuan respectively, up 14.32%, 13.45%, and 11.84% year-on-year respectively. Net profit to mother is 546 million yuan, 641 million yuan, and 711 million yuan, respectively, up 26.32%, 17.52%, 10.88% year-on-year, and EPS is 1.36 yuan/share, 1.60 yuan/share, and 1.78 yuan/share. The PE corresponding to the current stock price is 10.84 billion yuan, respectively Times, 9.23 times, and 8.32 times, maintaining the “recommended” rating.
Risk warning: Risk of order fulfillment falling short of expectations; risk of accounts receivable recovery falling short of expectations.