Incidents:
Jingjin Equipment released its 2023 and 2024 quarterly reports. In 2023, the company achieved revenue of 6.249 billion yuan, +9.98% year over year, realized net profit of 1,008 billion yuan, +20.89% year over year, and realized net profit without return to mother of 987 million yuan, +19.72% year over year.
2024Q1 achieved revenue of 1,507 billion yuan, +2.66% year over year, realized net profit of 229 million yuan, +6.70% year over year, and realized net profit of 219 million yuan without return to mother, +5.06% year over year.
Minerals, processing, and new energy materials have driven the company's performance to achieve steady growth. Looking at 2023 by sector:
Environmental protection: achieved revenue of 1,605 billion, yoy +10%, accounting for 25.76%, yoy+0.01pct;
Minerals and processing: achieved revenue of 1,659 billion, yoy +7%, accounting for 26.62%, yoy-0.73pct;
New energy and new materials: achieved revenue of 1,655 billion yuan, yoy +46%, accounting for 26.56%, yoy+6.54pct, of which new energy was 1,535 billion yuan, accounting for 24.63%, and new materials were 120 million yuan, accounting for 1.93%;
Chemical industry: achieved revenue of 611 million, yoy -16%, accounting for 9.80%, yoy-3.06pct;
Gravel: achieved revenue of 392 million, yoy -5%, accounting for 6.29%, yoy-1.03pct;
Biomedicine: Achieved revenue of 310 million yuan, yoy -18%, accounting for 4.97%, yoy-1.73 pct, of which biological food was 242 million yuan, accounting for 3.89%, and pharmaceuticals and health products amounted to 67 million yuan, accounting for 1.08%.
Looking ahead to 2024, the new energy sector is expected to achieve steady growth in the annual performance of the new energy sector due to a decline or pressure in the growth rate of power battery capital expenditure, and demand in other fields is underpinned. Among them: Environmental protection is expected to maintain steady growth, mainly from sewage treatment plant construction and industrial sewage treatment in Tier 4 and 5 cities. Furthermore, in March 2024, the State Council issued the “Action Plan to Promote Large-scale Equipment Renewal and Consumer Goods Trade-in”, which proposes “a significant increase in the production capacity ratio of environmental protection performance reaching grade A”, which is expected to accelerate the upgrading of environmental protection equipment (such as filter presses) to high-end and complete integration; mineral processing is expected to maintain a high level of growth, and the increase comes from the recycling of mineral tailings; the gravel industry is expected to change positive growth, and the main customers are downstream gravel Mines Increased motivation to bid.
The profit growth rate is higher than the revenue growth rate, and profitability continues to increase.
In 2023, the company's gross margin was 31.75%, +1.02pct year on year, and the net interest rate was 16.13%, +1.45pct; the 2024Q1 company's gross margin was 29.96%, -0.13pct, +1.07pct month-on-month, net margin was 15.17%, +0.58pct year on year, and -1.59pct month-on-month, the main factors of steady increase in profitability: ① The overall price of raw materials for commodities such as polypropylene and steel is low; ② The company has good cost control and significant scale effect in 2023 The cost rate for the period was 10.15%, -0.82pct year on year, of which the sales expense ratio was 4.57%, -0.14pct; the management expense ratio was 2.65%, -0.95pct year on year, due to the reduction in equity incentive cost amortization and maintenance costs; the R&D cost rate was 3.37%, +0.17pct year on year, reflecting the company's focus on R&D investment, continuous development of supporting equipment, and promoting the application of filter presses in new industries; the financial cost ratio was -0.44pct, year-on-year +0.13pct, which increased interest expenses.
Complete equipment+overseas market expansion to open up the company's growth ceiling.
1) The industrialization of complete equipment continues to advance. In 2023, supporting equipment achieved revenue of 420 million yuan, accounting for 6.73%, a significant increase over 2022. The complete filtration equipment produced by the company includes all kinds of filter presses, feed plunger pumps, belt conveyors, screw conveyors, scraper conveyors, mixers, thickeners, belt concentrators, etc. The company's advantages are: ① large-scale advantages: the production process is basically the same as the filter press; ② integrated integration: improving circulation speed and filtration effect to help customers reduce costs and enhance customer stickiness. In 2024, the company will actively promote the construction of the “Second Phase Filtration Equipment Industrialization Project” to further increase the company's production capacity, and is optimistic about the rapid development of the company's complete equipment business under the release of production capacity; 2) Continuously strengthen overseas sales and after-sales service network construction. In 2023, the company achieved overseas revenue of 318 million yuan, +17.03%, accounting for 5.09%, or +0.3 pct year on year. In the future, with stable product quality and excellent after-sales service, the company's share of overseas revenue is expected to continue to increase. At the same time, the gross margin of the company's overseas business was 54.82% in 2023, higher than the gross profit margin of domestic business of 30.51%. In the future, as the share of high-margin overseas business increases, the company's profitability is expected to continue to increase.
The company operates steadily, and high dividends highlight the investment value.
Since listing, the company has maintained high dividends against the backdrop of steady performance. The company's cash dividends in 2020-2023 were 2.86, 3.30, 5.77, and 611 million yuan respectively, accounting for 55.56%, 50.93%, 69.15%, and 60.64% of net profit to mother for the year, respectively. Since listing, the company has distributed a total of 2,283 billion yuan in cash dividends. The company continues to pay high dividends, which highlights the value of the company's investment.
Investment advice:
We expect the company's revenue for 2024-2026 to be 67.86, 73.17, and 7.902 billion yuan respectively, with year-on-year growth rates of 8.59%, 7.82%, and 8.00% respectively, net profit of 11.04, 12.29 billion yuan, and 10.58% year-on-year growth rates of 9.52%, 11.32%, and 10.58% for PE, respectively, 12X/11X/10X, with a 6-month target price of 26.74 yuan, corresponding to 14X PE in 2024, maintaining a “buy-A” investment rating.
Risk warning: Downstream capital expenditure falls short of expectations, production capacity release falls short of expectations, risk of fluctuations in raw material prices, overseas market expansion falls short of expectations, and the expansion of complete equipment falls short of expectations.