Incident: On the evening of April 29, the company released its 2024 quarterly report.
Key points of investment
2024Q1's performance increased 13% year on year, maintaining a high growth rate, and profitability continued to improve. The company achieved revenue of 11.773 billion yuan in the first quarter of 2024, up 12.93% year on year; net profit to mother was 916 million yuan, up 13.06% year on year; net profit without return to mother was 777 million yuan, up 19.45% year on year. The increase in performance was mainly due to the rapid expansion of overseas markets. The company's gross profit margin for the first quarter was 28.65%, up 2.26 pct year on year, 1.76 pct; net profit margin was 8.67%, up 0.43 pct year on year, 2.54 pct month on month, and profitability continued to improve; sales expense ratio, management expense ratio, R&D cost rate, and financial expense ratio were 7.36%, 4.48%, 5.65%, and 0.46%, respectively, +0.87pct, +0.88pct, -0.73pct year over year.
Strong overseas growth continued, with overseas revenue accounting for 48%. Capacity expansion and network deepening supported future development companies' overseas revenue of 5.703 billion yuan in the first quarter of 2024, an increase of 52.85% over the previous year, and the share of total revenue increased to 48%. Export revenue from overseas revenue increased 60.95% year on year, maintaining a high trend. Localization strategies in key countries achieved remarkable results in 2023. Gongqi products became the brand with the highest market share in Turkey and Central Asia, and built products to maintain the number one position in the Turkish market. Markets such as Saudi Arabia, Malaysia, Vietnam, and Kenya have rapidly increased their market share through localization efforts. Oil-producing countries such as Turkey, Saudi Arabia, and the United Arab Emirates are promoting infrastructure, and demand is growing rapidly and is expected to continue. The overseas subsidiary CIFA in Italy expanded its business into various fields such as construction and construction. The company has built more than 30 first-level business airports, more than 350 second-level outlets, and its products cover more than 140 countries and regions.
The dominant business has been rising steadily, and emerging businesses have continued to break through. The spin-off and listing of high-altitude machinery accelerated development. The company's dominant business was rising steadily in 2023. Revenue from concrete machinery and lifting machinery both increased 1.6% year-on-year, accounting for 59.3% of revenue. Data products have been delivered in batches, and construction of a truck-mounted crane plant in Chongqing has begun. Emerging businesses continued to break through. Earthmoving machinery revenue increased 89.3% year on year, CUHK's domestic share doubled year on year, and overseas revenue increased by more than 100% year on year. Mining machinery revenue was nearly 800 million yuan, an increase of 140% over the previous year. The first self-developed 100-ton nationally produced chemical electric drive mining truck has been discontinued. Aerial machinery revenue increased 24.2% year-on-year, ranking first in the domestic market share for small and medium-sized customers. The product spectrum achieved full coverage of 4-72 meters, and the penetration rate of electrified products reached more than 90%. The company is promoting the injection of the high-tech business into the subsidiary Lu Chang Technology to achieve a spin-off and listing. After the transaction is completed, Zhonglian Hi-Tech's financial strength will be further enhanced, and it is expected to seize the opportunity to accelerate development.
The construction machinery industry is gradually bottoming out, and there is a trilogy of recovery: the start of the renewal cycle, improvement in domestic demand, and steady export renewal: domestic estimates are based on the 8-9th year of excavators as the peak renewal period, and it is expected that 2024 will begin a new renewal cycle. Domestic demand: As real estate and infrastructure policies continue to be favorable, the operating rate is expected to rise, and domestic demand will gradually improve. Exports: Overseas market share continues to rise, and China's leaders are gradually becoming global leaders. From January to January 2024, China's cumulative export value of construction machinery (in RMB) was 85,291 billion yuan, an increase of 7.52% over the previous year.
Profit forecast: Net profit from 2024 to 2026 is expected to be 4.5 billion, 6 billion yuan, and 7.7 billion yuan, up 29%, 33%, and 28% year-on-year, and PE is 16, 12, and 10 times, maintaining the purchase rating.
Risk warning: 1) Infrastructure investment and housing commencement fell short of expectations; 2) Exports fell short of expectations