Net profit for 24Q1 was 53 million yuan, an increase of 208.60% over the previous month. (1) 24Q1 revenue of 463 million yuan, -45.83% YoY, -53.31% month-on-month, mainly due to slow start of construction and delays in demand for goods in the current period; net profit to mother was 53 million yuan, -29.12% YoY, +208.60% month-on-month. Revenue for the full year of 2023 was 4.325 billion yuan, -15.30% year-on-year, mainly due to active elimination of some risky domestic onshore product projects; net profit to mother was 425 million yuan, -5.58% year-on-year. (2) Profitability has improved. 24Q1 gross profit margin of 31.60%, YoY +12.60pct, net profit margin 11.44%, YoY +2.70pct. Gross profit margin for the full year of 2023 was 23.44%, +6.72pct year on year, net profit margin 9.83%, +1.01pct year on year. We think it is mainly due to improvements in product structure and an increase in the share of overseas businesses with high gross margins.
The overseas business process has been accelerated, and the share of overseas business revenue has increased dramatically. (1) 2023 wind power equipment/new energy power generation/other business revenue was 41.46/1.32/047 billion yuan respectively, and the gross margin of wind power equipment/new energy power generation was 20.76%/89.65% respectively, of which the gross margin of wind power equipment was +5.65pct year on year. (2) Domestic/overseas revenue accounted for 60.36%/39.64% respectively, revenue was -38.84%/+104.63%, respectively, and gross margin was 20.97%/27.20%, respectively. The export business is dominated by offshore products. Overseas offshore shipping volume is nearly 100,000 tons, sales volume increased by more than 4,000 percent year on year, and revenue increased by more than 4,300 percent year over year.
There is a shortage of basic offshore production capacity in Europe, and European developers have locked in the company no more than 400,000 tons of production capacity. (1) GWEC predicts that the global offshore wind market CAGR forecast for 2024-2028 will increase to 28% (14.8% in the past 5 years). According to Daikin Heavy Industries' 2023 annual report quoting GWEC's 2023 report, Europe, Asia Pacific (excluding China), and North America will all experience insufficient production capacity in recent years. In particular, Europe will experience a clear capacity gap after 2027. Currently, with the exception of China, the production capacity satisfaction rate of global offshore wind power infrastructure is less than 70%. (2) The 24Q1 company's contract debt was 988 million yuan, +67.77% year-on-year, mainly due to an increase in advance payments received in the current period. In April 2024, a European offshore wind power developer signed a production lock-up agreement with the company, locking in production capacity of no more than 400,000 tons between now and 2030, and paying the company 14 million euros in one lump sum. We believe that as global demand for ocean breezes picks up and overseas production capacity is scarce, the company has a pioneering advantage and a leading edge in deep-water ports, and is expected to benefit, and overseas orders may continue to grow.
The 24Q1 fee rate increased a lot and is expected to decline as the sales scale increases. Net operating cash flow in 24Q1 was -96 million yuan, a significant year-on-year improvement; net operating cash flow in 2023 was 809 million yuan, +620.76% year-on-year, mainly due to a decrease in security deposit payments compared to the previous period and the withdrawal of transactions from Shangyi Jinzhi.
The cost ratio for the 24Q1 period was 18.03%, compared to +10.70pct. Among them, the management fee ratio increased a lot. We believe it was mainly affected by the decrease in 24Q1 revenue, and the dilution effect weakened. The cost rate for the 2023 period was 12.63%, +5.10pct year-on-year, of which R&D expenses were 256 million yuan, +18.70% year-on-year.
Profit forecasting and valuation. The company's net profit for 2024-2025 is estimated to be 623 million yuan and 894 million yuan respectively, corresponding to EPS of 0.98 and 1.40 yuan/share. Considering the development potential of the company's single export pile, referring to comparable company valuations, the company was given 25-30x PE in 2024 (corresponding PS ratio is 2.75-3.30x), with a reasonable value range of 24.43-29.32 yuan, giving it a “superior to the market” rating.
Risk warning. Sea Breeze installations fall short of expectations, competition increases risks, and export+production expansion falls short of expected risks.