Event: The company released its 2024 quarterly report. 2024Q1 achieved operating income of 140.15 billion yuan, +5.2% year on year, net profit to mother of 3.04 billion yuan, +0.8% year on year, net profit after deducting non-return to mother of 3.02 billion yuan, +1.3% year on year.
Revenue grew steadily, and profit margins were stable. (1) The 24Q1 company achieved a comprehensive gross profit margin of 11.8%, a year-on-year decline of 0.4 pct, and the sales/management/R&D/finance expense ratios were 0.2%/3.0%/2.3%/1.5% respectively, which was basically flat /+0.1pct/-1.2pct. The sharp decline in financial expense ratios was mainly affected by net exchange earnings achieved in the first quarter; (2) 24Q1 asset/credit impairment losses were -4.2/-150 million yuan, respectively, and increased by 41/40 billion yuan, respectively. Due to an increase in asset impairment losses, an increase in the size of accounts receivable, and changes in the age structure; net investment income was 290 million yuan, a year-on-year decrease of 160 million yuan, mainly due to a decline in investment income from joint ventures; under the combined influence, the company's 24Q1 net interest rate to mother was 2.2%, -0.1 pct year on year.
Net cash outflow from operating activities increased, and the balance ratio increased slightly. (1) The 24Q1 net cash flow from operating activities was -390.0 billion yuan, with a year-on-year increase of 6.04 billion yuan, and the payout ratios were 96.4%/122.9%, respectively, +8.7/+18.3pct; (2) By the end of the first quarter, the company's interest-bearing debt balance was 478.4 billion yuan, up 63.6 billion yuan year on year, and the balance ratio was 78.2%, +0.5pct year on month.
New orders continued to grow in 24Q1, and the growth rate of energy, electricity, water resources and environmental businesses was high. 24Q1 achieved a new contract amount of 331.12 billion yuan, or +2.7%. By business, energy, electricity, water resources and environment/urban construction and infrastructure/other businesses achieved new contract amounts of 1987/535/695/94 billion yuan, respectively, +26.5%/+6.3%/+2.2% year-on-year; 24Q1 China completed investment in water conservancy construction of 193.3 billion yuan, the highest in the same period in history. 9683 new water conservancy projects were started, with an investment scale of 473.3 billion yuan, respectively, an increase of 3.38 billion yuan over the same period last year. %, 47.6%; Water conservancy projects are highly dependent on financial resources. The issuance of an additional trillion treasury bonds in the fourth quarter of last year will provide a strong financial guarantee for the implementation of major water conservancy projects and have a strong driving effect on the water infrastructure side, and the company's water conservancy business is expected to fully benefit.
Profit forecast and investment rating: The company is a large-scale comprehensive engineering construction enterprise group in the country. In recent years, it has accelerated the integration of “investment, construction and operation”. The amount of new project contracts is expected to benefit from the continued boom in energy and electricity investment. The water conservancy sector business is expected to benefit from high growth in water conservancy investment, and the pace of promotion of new energy investment and operation business is accelerating. We adjusted the company's net profit forecast for 2024-2025 to 146.4/16.33 billion yuan (the previous value was 15.5.2 billion yuan, 17.69 billion yuan), and added the 2026 forecast to 18.35 billion yuan. The price-earnings ratio corresponding to the closing price on April 30 was 6.0/5.4/4.8 times, respectively, maintaining the “buy” rating.
Risk warning: New energy construction falls short of expectations; the integration of the company's “investment, construction and operation” is falling short of expectations; the growth rate of infrastructure investment falls short of expectations; state-owned enterprise reforms fall short of expectations.