DHPI(603856) Tianfeng Securities·2024-04-30 11:00Investment Rating - The report maintains a "Buy" rating for the company with a target price of 13.40 CNY, based on a valuation of 15 times the expected earnings for 2024 [2][21]. Core Views - The company has shown steady revenue growth, with a 2023 revenue of 2.86 billion CNY, a year-on-year increase of 0.4%. The net profit attributable to the parent company was 160 million CNY, up 8% year-on-year [1][19]. - The report highlights the positive impact of increased water conservancy investments, which are expected to drive demand expansion in the industry [20][19]. - The company is actively expanding its production capacity for high-performance composite pipelines, which is anticipated to enhance its market position [19][20]. Financial Performance - In Q4 2023, the company reported a revenue of 740 million CNY, a decrease of 4.2% year-on-year, but achieved profitability with a net profit of 7 million CNY [1]. - For Q1 2024, the revenue was 640 million CNY, reflecting a year-on-year growth of 0.4%, with net profits of 52 million CNY, an increase of 8.7% [1]. - The overall gross margin for 2023 was 19.4%, slightly up from the previous year, driven by the performance of corrosion-resistant pipelines [19]. Cost and Cash Flow - The report notes a slight increase in expense ratios, with a total expense ratio of 10.78% in 2023, up 1.18 percentage points year-on-year [27]. - Cash flow from operations improved significantly, with a net cash flow of 190 million CNY in 2023, an increase of 174 million CNY year-on-year [27]. Market Position and Outlook - The company is expected to benefit from structural support in infrastructure due to ongoing water conservancy projects, particularly in regions like Guangdong [2][19]. - The report anticipates that the company's focus on multi-modal transportation will facilitate the delivery of several large projects, enhancing its operational efficiency [19].