Overseas business accounts for nearly 70% of revenue, and is expected to benefit from increased demand from overseas businesses in the future. (1) In 2023, the company's material handling equipment, marine engineering equipment and supporting equipment, and hazardous medical waste disposal business revenue accounted for 57.24%/20.04%/9.96%/5.76%, respectively, of which the gross margin of material handling equipment and marine engineering and supporting equipment was 18.96%/19.22%, respectively; by region, the share of overseas/domestic revenue was 69.10%/30.90%, with gross margin of 18.35%/25.07% respectively. We think it is mainly the 2023 company's environmental gross profit margin 24.04% is higher than the gross profit margin of high-end equipment of 19.11%, while the environmental protection business is mainly domestic, making domestic gross margin higher than overseas gross profit margin. (2) Accrued impairment results in an increase in the company's revenue and no increase in profit. In 2023, the company's revenue was 7.183 billion yuan, +38.82% year on year; net profit to mother was 55 million yuan, +4.12% year over year. We believe it was mainly due to the impairment of the company's estimated assets of $334 million in 2023.
The global material handling equipment market will reach US$275.1 billion by 2032, and the market is huge. (1) Market space. Material handling equipment: According to Global Market Insights, the global material handling equipment market is US$168 billion in 2023, and is expected to reach US$275.1 billion in 2032, with a CAGR of 5.5%; marine cranes: According to GII, global marine cranes will grow from US$28.13 billion in 2023 to US$72.16 billion in 2031, with a CAGR of 12.5%; Seafeng single pile: According to QYResearch, the global offshore wind power single pile market sales in 2023 46.2 billion yuan, expected to reach 70.4 billion yuan in 2030, with a CAGR of 6.2%; marine vessels: According to Industry today's estimates, the global marine ship market value will reach US$4.405 billion in 2023, and US$5.549 billion by 2030, with a CAGR of 3.4%. (2) Competitive landscape. Material handling equipment: Shangpu Consulting Baijia data shows that the concentration of China's material handling equipment industry is low, with a CR4 of 41.1%. Combined with the company's 2023 revenue of 4.112 billion yuan, the global market share is only 0.35%, and there is plenty of room for improvement; Offshore Equipment: According to the NetEase number of Forward-looking Industry Research Institute, the British KHL Group announced the world's largest crane manufacturer in 2023. Chinese manufacturers occupied 4 places in the top 10. Xugong Machinery and Zhenhua Heavy Industries ranked 3rd and 5th respectively. Combined with the company's 2023 offshore equipment revenue of 1,439 billion yuan, its global market share is 0.52%, and there is also plenty of room for improvement.
Ongoing orders are sufficient, risk of impairment has been eliminated, strong demand for overseas infrastructure+ship upward cycle+domestic and foreign sea wind demand has improved, and the main business of three-wheel drive companies has grown. (1) There are sufficient orders in hand, and it will develop rapidly with the development of overseas infrastructure markets. In January 2024, the company successively received orders for 5 GENMA mobile port cranes (MHC) from overseas customers. In addition, the company has signed three bulk equipment order contracts with the UAE National Meteorological Service, with a total price of over 10 billion yuan. (2) After the impairment of goodwill was completed, the company went to battle lightly.
In 2021-2023, the company calculated impairment of goodwill - 0.02 million yuan/481 million yuan/216 million yuan respectively. The proportion of goodwill in the company's net assets decreased from 21.57% to 5.49%, and the risk of impairment was greatly reduced. (3) Offshore businesses will benefit from improved demand for ocean breezes and a sharp rise in quantitative efficiency. According to the GWEC report, the global installed capacity of offshore wind power will increase from 10.8 GW in 2023 to 37.1 GW in 2028, with a CAGR of 27.99%.
We believe that with the restoration of the seabreeze industry's installed capacity, the company's offshore business will rise sharply.
Profit forecast and valuation suggestions: The company's net profit due to mother in 2024-2025 is estimated to be RMB351 million and RMB491 million respectively, corresponding to EPS of 0.40 and 0.55 yuan/share. Referring to comparable company valuations, the company was given 15-18X PE in 2024. The reasonable value range was 6.00-7.20 yuan, giving it a “superior to the market” rating.
Risk warning: Overseas market development & sea breeze market falls short of expectations; increased competition; risk of exchange rate fluctuations.