Results grew steadily in '23 and 24Q1. The company achieved revenue of 6.872 billion yuan in 2013, +39.00% year on year, and net profit to mother of 1,031 billion yuan, +20.48% year over year. The increase in performance is mainly due to increased revenue from energy storage products and sales revenue from power plants. The gross profit margin was 28.43%, and the net profit margin was 15.27%. Both gross margin and net interest rate declined due to changes in the revenue structure (increase in the share of revenue from energy storage products with low gross margin). On a quarterly basis, 23Q4 achieved revenue of 2.122 billion yuan, +58.21% year-on-year, and net profit of 180 million yuan to mother, +47.65% year-on-year. 24Q1 achieved revenue of 1,554 million yuan, +45.95% year over year, and net profit to mother of 218 million yuan, +10.78% year over year.
I am optimistic that smart electricity distribution and going overseas will continue to be booming. The revenue of the smart power distribution industry was 2,476 billion yuan in 23 years, +1.77% year over year, gross profit margin of 33.93%, +2.53 pct year on year. (1) Domestic: The company won 626 million yuan from the State Grid and 299 million yuan from the South Grid in '23, maintaining the leading level of the industry. (2) Overseas: The company cooperates with global electricity meter leader Rangel to expand Western Europe and Asia Pacific; is based in Central and Eastern Europe through its wholly-owned subsidiary EGM, with Poland's market share of more than 30%, expanding Romania, Bulgaria, Hungary, etc.; making strategic investments with ECC, a well-known Middle Eastern company, covering Oman, Kuwait, etc.; and achieved batch delivery in Indonesia, covering Malaysia, Thailand, Vietnam, etc.
Revenue from new energy and energy storage is growing rapidly. The photovoltaic/energy storage industry's revenue for 23 years was 2,803/1,506 billion yuan, +44.27%/253.62% YoY, with a gross profit margin of 30.81%/16.09%. In September '23, the company completed the full 6GW production capacity of TopCon batteries. By the end of '23, the installed capacity of the power plants operated and maintained by the company had exceeded 12 GW, and the operating and maintenance capacity was +50% compared to the same period. The company was successfully approved for nearly 1 GWh shared energy storage project in 23 years, and has accumulated more than 6 GWh of energy storage project resources.
The dividend ratio is at a high level. In '23, the company plans to distribute a cash dividend of 618 million yuan (tax included), with a cash dividend ratio of 65.02%, continuously creating value for shareholders.
Profit forecast and investment advice: The net profit for 24-26 is expected to be 11.97/14.07/1,557 billion yuan, up 16.1%/17.5%/10.7% year over year. The company was granted net profit of 15.0xPE for 24 years, corresponding to a reasonable value of 8.72 yuan/share. Maintain a “buy” rating.
Risk warning: competition in overseas markets intensifies; electricity meter tenders fall short of expectations; new technology route risks, etc.