POWERCHINA Ltd(601669) 光大证券·2024-05-06 01:03Investment Rating - The report maintains a "Buy" rating for China Power Construction (601669.SH) with a current price of 5.08 CNY [1] Core Views - The company has shown steady growth in new contracts and performance, driven by its dual engines in water conservancy and energy sectors. In 2023, the company achieved revenues of 609.4 billion CNY, a year-on-year increase of 6.4%, and a net profit attributable to shareholders of 13 billion CNY, up 13.6% [6][7] Summary by Sections Financial Performance - In 2023, the company reported revenues of 609.4 billion CNY, net profit of 13 billion CNY, and net profit excluding non-recurring items of 11.7 billion CNY, reflecting increases of 6.4%, 13.6%, and 13.2% respectively. For Q1 2024, revenues were 140.3 billion CNY, net profit was 3 billion CNY, and net profit excluding non-recurring items was also 3 billion CNY, showing year-on-year growth of 5.1%, 0.8%, and 1.3% respectively [6][7] Contract Growth - The company signed new contracts worth 1,142.8 billion CNY in 2023, a 13.2% increase year-on-year. The water conservancy and energy sectors saw significant growth, with new contracts of 100.7 billion CNY and 616.8 billion CNY, representing increases of 70.4% and 36.2% respectively. In Q1 2024, new contracts totaled 331.1 billion CNY, a 2.7% increase, with energy contracts continuing to show strong growth at 198.8 billion CNY, up 26.5% [7] Profitability and Margins - The company's gross margin improved to 13.2% in 2023, an increase of 1 percentage point. The gross margins for surveying and design, power investment and operation, and other businesses were 10.8%, 44.4%, and 28.7%, respectively, with increases of 0.98, 4.27, and 5.71 percentage points. The company maintained a period expense ratio of 8.8%, up 0.7 percentage points [7][8] Investment and Future Outlook - The report projects a slight downward adjustment in net profit forecasts for 2024 and 2025 to 14.64 billion CNY and 16.46 billion CNY, respectively, with a new forecast for 2026 at 18.33 billion CNY. The growth in water conservancy orders and the ongoing expansion of the renewable energy business are expected to support performance growth [8][9]