XJEC(SZ:000400) Soochow Securities·2024-05-02 10:00Investment Rating - The report maintains a "Buy" rating for the company [1] Core Views - The company reported a revenue of 2.81 billion yuan in Q1 2024, a year-on-year decrease of 15%, while the net profit attributable to shareholders was 237 million yuan, an increase of 47% year-on-year [2][3] - The gross margin for Q1 2024 was 18.27%, up by 5.06 percentage points year-on-year, and the net profit margin was 8.44%, up by 3.86 percentage points year-on-year, indicating a significant improvement in profitability [2][3] - The company is gradually divesting its low-margin renewable energy EPC business, which has slightly impacted revenue growth but has led to substantial profit increases [3] - The company has a robust order backlog, with a significant increase in contract liabilities, indicating strong future revenue potential [3] Summary by Sections Financial Performance - Total revenue for 2022 was 15.03 billion yuan, with a year-on-year growth of 25.35%. For 2023, revenue was 17.06 billion yuan, with a growth of 13.51%. Projections for 2024, 2025, and 2026 are 20.00 billion yuan, 23.89 billion yuan, and 26.69 billion yuan, respectively, with expected growth rates of 17.24%, 19.44%, and 11.72% [2][8] - The net profit attributable to shareholders for 2022 was 785.26 million yuan, increasing to 1.00 billion yuan in 2023, with projections of 1.16 billion yuan, 1.68 billion yuan, and 1.87 billion yuan for the following years, reflecting growth rates of 28.03%, 15.81%, 43.94%, and 11.82% [2][8] Market Position and Growth Potential - The company has successfully secured contracts for six converter stations and four sets of DC control systems, with expectations for further growth in the ultra-high voltage sector [3] - The report highlights the company's strategic focus on high-quality projects and market expansion, with a notable increase in operating cash flow, which reached 260 million yuan in Q1 2024, a year-on-year increase of 402% [3][9] Valuation Metrics - The current price-to-earnings (P/E) ratio is projected to be 23x for 2024, 16x for 2025, and 14x for 2026, indicating a favorable valuation relative to expected earnings growth [3][9]