Incident: The company announced that 2024Q1 revenue of 4.427 billion yuan decreased by 11.77%; net profit to mother of 203 million yuan increased by 1.12%; net profit not attributable to mother of 87 million yuan decreased by 38.79%.
Profitability has picked up, and government subsidies have an impact on deducting non-net profits. The gross sales margin of the 2024Q1 company was 10.59%, up 1.34 pct; the period expense ratio was 7.18%, with 2.54 pct, with the company's sales/management and R&D/finance expenses ratio being 0.51%/4.98%/1.70%, respectively, increasing 0.04pct/2.14pct/0.36pct, respectively. Among them, R&D expenses increased significantly or because the company continued to promote intelligent transformation; net profit margin 4.59% increased 0.59pct; net profit margin after deducting non-return mother was 1.98% and decreased 0.87pct It is mainly due to the 2024Q1 government subsidy of 151 million yuan, an increase of 103.8%.
Changes to the profit distribution plan reflect shareholder returns, and intelligent transformation continues to advance. Recently, the company announced that it decided to change the company's 2023 profit distribution plan to raise the original plan's dividend of 0.26 yuan/share to 0.52 yuan/share, corresponding to the closing price of April 30, with a dividend rate of 2.7%, and a cash dividend ratio of 30.3% in 2023. This change highlights the importance the company attaches to shareholder returns. At the same time, the company's intelligent transformation continues to advance. Recently, it issued an announcement to bid for 2000 sets of robot walking axes and ground rails, which may be mainly used in integrated systems for industrial welding robots. With the promotion of intelligent transformation, single-ton profits are expected to bottom out and rise, laying a solid foundation for sustainable development. As the issuance of local government special bonds is expected to accelerate in May, with projects supported by special treasury bonds or gradually being implemented, leading to a month-on-month improvement in infrastructure workload, downstream demand is expected to improve. As a leading steel structure manufacturer, the company has remarkable market reputation and cost advantages, and is expected to be the first to benefit. Increased capacity utilization and month-on-month profit improvements are worth looking forward to.
Investment advice: We expect the company to achieve operating income of 267.34/311.46/36.914 billion yuan and net profit to mother of 12.22/12.85/1,568 billion yuan in 2024-2026. The PE corresponding to the closing price on April 30 was 10.76/10.23/8.38 times, respectively, maintaining the “gain” rating.
Risk warning: Economic recovery falls short of expectations, capacity utilization falls short of expectations, risk of raw material price fluctuations.