Steady growth in performance, maintaining a “buy” rating
The company released its annual report for the year 23. In '23, the company achieved revenue of 608.439 billion yuan, net profit to mother of 12.988 billion yuan, +13.58% year-on-year, after deducting net profit of 11.713 billion yuan without return to mother, +13.17% year-on-year.
Among them, Q4 achieved revenue of 187.805 billion yuan in a single quarter, +7% year-on-year, net profit of 3.498 billion yuan, +24.01% year-on-year, net profit of non-return to mother of 2,463 billion yuan, or -26.65% year-on-year. The company's cash dividend ratio in '23 was 18.1%, which is basically the same as the previous year. The dividend rate corresponding to the closing price of April 25 was 2.67%.
Considering that infrastructure investment may slow down, we slightly lowered our 24-25 profit forecast. We expect to achieve net profit of 148, 169, and 19.6 billion dollars (previous value of 1.53 billion and 17.6 billion in 24 and 25), and the corresponding PE for 24-26 is 5.98/5.21/4.51, maintaining a “buy” rating.
Energy and electricity have maintained a high level of prosperity. Under the catalyst of trillion treasury bonds, the company's water conservancy business is expected to benefit significantly in terms of business segments. The revenue from engineering contracting, survey and design/ power investment and operation/other businesses was 5506/240/31.5 billion, respectively, +9%/+1%/-24% year-on-year. Engineering contracting and survey design mainly benefited from the rapid expansion of new energy businesses such as solar power generation engineering contracting. In '23, new energy revenue was 9.5 billion yuan, +10% compared to the same period last year. At the end of 23, the company held a grid-connected installed capacity of 27.19 GW (20.38 GW in the same period last year), including 8.41 GW of wind power, +9.97%; 7.73 GW of solar power, +189.66%; 6.85 GW of hydropower, -0.07%; 3.65 GW of thermal power, +15.35%; and 0.55 GW of independent energy storage, up 1006% year over year. The total investment plan for the year 24 is 138.9 billion yuan, and the energy and power sector plans to invest 86.5 billion yuan, of which the new energy project investment plan is 81.1 billion yuan (the total planned investment for energy and power/new energy projects for the same period last year was 1430/597/47.5 billion yuan, respectively). The company signed a new contract amount of 1142,844 billion yuan in '23, +13.24%. Among them, 23M12 achieved a sharp rebound in a single month, with a year-on-year increase of 123.4% to 169.848 billion yuan; new energy power/water business contracts were signed in '23, or 616.774/1007.3 billion yuan, +36.17%/+70.39% year-on-year. We believe that with the support of trillion treasury bonds, the company's water conservancy business is expected to maintain a high growth rate.
Profitability continues to improve, and cash flow still has room to improve
In '23, the company achieved a gross profit margin of 13.23%, +1.02pct year on year. Among them, the 23Q4 single quarter gross profit margin was 15.32%, +1.87pct year on year. The gross margins of engineering contracting, survey and design/power investment and operation/other businesses in 23 years were 10.84%/44.4%/28.74%, respectively, +0.98/+4.27/+5.71 pct year-on-year, respectively. The sharp increase in gross margin of electricity investment and operation has mainly benefited from the increase in the profitability of overseas projects. The cost rate for the 23-year company period was 8.77%, +0.71 pct year over year. Among them, the sales/management/finance/R&D expense ratios were +0/+0.45/+0.18pct, respectively. The increase in financial expenses was mainly due to net exchange losses of 427 million yuan in 23 (-1,731 million yuan in the same period last year). The company's net interest rate in '23 was 2.82%, +0.08pct year on year, and 2.6% for single 23Q4, +0.56pct year on year. The company's net CFO in '23 was $22.265 billion, -27.79% year-on-year. The decline in net operating cash flow was mainly due to a decrease in tax rebates received.
Risk warning: Infrastructure investment falls short of expectations; macroeconomic downturn; overseas demand falls short of expectations; project order carry-over falls short of expectations.