CIMC ENRIC(HK:03899)2024-03-26 16:00Investment Rating - The report assigns a "Buy" rating to the company with a target price of HKD 9.04, indicating a potential upside of 26.3% from the current price of HKD 7.16 [3][12]. Core Insights - The company's core profit for 2023 increased by 4.4% year-on-year to RMB 1.28 billion, surpassing market expectations by 5-8%. The clean energy segment was a significant growth driver, with revenues and gross profits rising by 41% and 44%, respectively [1][2]. - The report highlights that the clean energy segment is expected to maintain a robust growth trajectory, with a projected compound annual growth rate (CAGR) of 19% from 2023 to 2026. The order backlog for clean energy products has increased by 54% year-on-year to RMB 16.6 billion, covering 90% of the forecasted revenue for 2024 [1][2]. - The hydrogen energy segment is anticipated to grow by 42% in 2024, reaching approximately RMB 1 billion in revenue. However, the chemical segment is expected to see a slight decline of around 4% in revenue due to a high base effect from 2022 [1][2]. Financial Summary - Revenue for 2023 is reported at RMB 23.63 billion, reflecting a year-on-year growth of 20.5%. The net profit for the same period is RMB 1.11 billion, with earnings per share (EPS) of RMB 0.63, marking a 21.5% increase [3][6]. - The company’s projected revenue for 2024 is RMB 27.55 billion, with a net profit forecast of RMB 1.37 billion and an EPS of RMB 0.67. The report indicates a slight adjustment in EPS forecasts for 2024 and 2025, reflecting conservative gross margin expectations for the chemical and liquid food segments [2][3]. - The dividend payout ratio has increased from 41% in 2022 to 49% in 2023, with a 25% increase in the final dividend [1][2]. Segment Performance - The clean energy equipment segment is projected to generate revenues of RMB 14.91 billion in 2023, with a growth rate of 40.8%. The chemical equipment segment is expected to decline by 15.8% to RMB 4.41 billion [8][9]. - The liquid food equipment segment is forecasted to grow by 18.6% to RMB 4.29 billion in 2023 [8][9]. - The gross margin for the clean energy segment is expected to remain stable, while the chemical segment's gross margin is projected to decline slightly [8][9].