Description of the event
The company achieved operating income of 229 million yuan in the first quarter, a year-on-year decrease of 11.11%; attributable net profit of 0.3 billion yuan, a year-on-year decrease of 25.13%; and net profit after deduction of 0.2 billion yuan, which changed from negative to positive.
Incident comments
The revenue scale declined year on year, resulting in a year-on-year decline in profit scale. The first quarter achieved operating income of 229 million yuan, a year-on-year decrease of 11.11%, and attributable net profit of 0.03 billion yuan, a year-on-year decrease of 25.13%; net profit after deduction was 0.2 billion yuan, which changed from negative to positive.
The gross profit margin and expense ratio both improved year on year, and depreciation surged down year on year, resulting in a year-on-year decline in net attributable interest rate. The company's comprehensive gross profit margin for the first quarter was 17.60%, up 2.99 pct year on year. In terms of cost ratio, the company's expense ratio for the first quarter was 20.95%, -2.00pct year on year. Sales, management, R&D and finance expenses changed 0.54, -0.60, -0.25, and -1.69pct year over year, respectively. The decline in management expenses was due to a reduction in the size of management personnel, labor cost control, reduction in litigation costs and reduction in depreciation expenses from idle asset leasing. The R&D system focuses on R&D investment, and controls the size of R&D personnel. A decrease in financial expenses means an increase in interest income.
In terms of impairment, asset impairment losses washed back 0.05 billion yuan, forming a year-on-year income of 0.13 million yuan, and a year-on-year decrease of 0.15 million yuan, mainly due to a decrease in bad debt preparation for the current period. Taken together, the company's net vested interest rate for the first quarter was 1.36%, down 0.25 pct year on year, and the net interest rate after deduction was 0.76%, up 4.88 pct year on year.
Cash flow Q1 was a net outflow, which turned negative year over year, and the cash to cash ratio declined. The company's net cash flow from operating activities in the first quarter was 95 million yuan, turning negative year on year. The revenue ratio was 104.44%, down 29.93 pcts year on year. At the same time, the company's balance ratio fell 4.04 pct to 46.96% year on year, and the number of accounts receivable turnover days decreased by 9.14 to 175.82 days year on year.
The optimization of personnel and the increase in dividend ratios highlight the value of the company. The company optimized the personnel structure during the downturn of the industry and promoted cost reduction and efficiency.
By the end of 2023, the company had a total of 3,281 employees, down 18.24% from the end of the previous year. Judging from the education and age of the R&D personnel, the structure has been optimized. At the same time, the company proposed for the first time: “If the company's development stage is mature and there are major capital expenditure arrangements, cash dividends should account for at least 40% of the current profit distribution when profit distribution is carried out”. Compared with 20% of the 2022 annual report, it shows the positive performance of the company's feedback to investors. Considering the pre-tax profit distribution of 0.8 yuan per share in 2023, the company's dividend payment rate has reached 97%, corresponding to the current stock price dividend rate of 7%.
I am optimistic about the long-term implementation of prefabricated buildings and BIM. The company is a design technology enterprise with design and R&D as the lead, and prefabricated construction and BIM as the core technology. The company is one of the earliest companies to carry out prefabricated building design research. As the penetration rate of prefabricated buildings continues to increase, the company is expected to share industry growth dividends; on the BIM side, the company continues to develop the Huayang rapid construction platform, firmly promotes positive BIM design, and actively builds an IBIM platform, using design as a starting point to open up the industrial data chain through independent research and development and strategic cooperation, and achieve data integration and iteration in various links to create a data platform and ecosystem for the entire industry chain. The BIM business is expected to continue to contribute benefits in the future. The company's 2024-2026 performance is expected to be 2.0, 220 million yuan, and 270 million yuan, corresponding to PE of 11.83, 10.56, and 8.77, maintaining a “buy” rating.
Risk warning
1. Risk of macroeconomic environment and policy changes;
2. The progress of prefabricated buildings falls short of expectations.