24Q1 revenue/net profit ratio +2.7%/+3.1% YoY, maintaining the “Buy” rating
The company achieved revenue/net profit of RMB 10.288/636 million yuan in 2024Q1, +2.7%/+3.1% year-on-year, and net profit to mother basically met our expectations (RMB 6.2 billion). 2024Q1 signed new orders of 21.22 billion yuan, -2% year-on-year. As of the end of 24Q1, the unfinished contract amount was 55.42 billion yuan, compared with -6.58% in the previous period. There are plenty of orders in progress, providing a guarantee for stable and continuous development. We maintained the company's net profit forecast for 2024-2026 at 33.1/37.4/4.20 billion yuan, comparable to the company's 2024 Wind forecast average of 15xPE, approved the company's 2024 15xPE, adjusted the target price to 18.80 yuan (previous value 16.29 yuan), and maintained the “buy” rating.
24Q1 gross margin +2.55pct year on year, net profit margin to mother +0.02pct24q1 Company's comprehensive gross profit margin was 19.5%, +2.55pct year on year. It is expected mainly due to rapid growth in overseas business and higher profit margins than domestic ones. The cost rate for the 24Q1 period was 11.2%, +1.9pct year on year. Among them, the sales/management/ R&D/finance expenses ratio was 1.3%/4.5%/3.1%/2.3%, -0.05/+0.38/-0.08/+1.62pct, and financial expenses increased 245% year over year. We expect it to be mainly affected by fluctuations in exchange profit and loss. Depreciation expenses accounted for -0.05pct to 0.06% of revenue year over year. Under comprehensive influence, 24Q1 net profit margin was +0.02pct to 6.19% year on year.
The revenue ratio increased year-on-year, and operating cash flow improved significantly
At the end of 24Q1, the company's balance ratio and interest-bearing debt ratio were 62.6%/12.0%, respectively, compared with +0.45/-0.31pct at the end of 23. The 24Q1 net operating cash amount was 1.19 billion yuan, with a year-on-year decrease of 80 billion yuan, mainly due to the company strengthening contract settlement, actively urging project repayment and reducing restricted funds. The revenue ratio was 71.9%, +5.5 pct year on year, and the payout ratio was 84.7%, +3.7 pct year on year. Accounts receivable and notes at the end of 24Q1 amounted to $10.88 billion, contract assets of $7.94 billion, and contract liabilities of $7.47 billion, compared with the end of 23 billion yuan; accounts payable and notes of $15.92 billion, and advance payments of $6.61 billion, compared to the end of 23 billion yuan, respectively.
Expanding equipment and operation and maintenance improved the quality of operations. The 24Q1 company maintained a high boom overseas, with new orders of 145.6/17.4/4.51 billion yuan respectively for engineering construction/equipment manufacturing/operation and maintenance services, -12%/+2%/+43%; by region, new domestic signings amounted to 6.92 billion yuan, -48% year over year, and 14.29 billion yuan, +70%, overseas accounting for 67%. We believe that with the recovery of investment and the support of the “Belt and Road”, overseas business is more prosperous than at home. While the company as a whole benefits from increased capital expenditure, there is more room for equipment, operation and maintenance expansion in the industrial chain. As the transformation progresses in an orderly manner, it is expected to drive a steady improvement in operating quality and efficiency.
Risk warning: The increase in the market share of equipment manufacturing fell short of expectations, the increase in the operation and maintenance of cement production lines and mines fell short of expectations, and investment in the cement industry declined significantly.