ZTT(SH:600522) Changjiang Securities·2024-05-20 08:32Investment Rating - The investment rating for the company is "Buy" and is maintained [5]. Core Views - The report highlights an improvement in the gross margin of the optical communication business, while the marine business is under pressure. There is optimism regarding the recovery of the marine business and opportunities in international markets [6][8]. - The company has a solid order backlog in the energy network sector, with approximately 26 billion yuan in hand orders, including 11.5 billion yuan in the marine segment [7][8]. Summary by Sections Financial Performance - In 2023, the company achieved a revenue of 45.07 billion yuan, a year-on-year increase of 11.9%. However, the net profit attributable to shareholders decreased by 3% to 3.12 billion yuan, and the net profit excluding non-recurring items fell by 15.2% to 2.67 billion yuan. For Q1 2024, revenue was 8.24 billion yuan, showing a slight year-on-year decline, while net profit was 640 million yuan, down 17% year-on-year but up 39% quarter-on-quarter [6][8]. Business Segments - The revenue breakdown for 2023 shows that the optical communication and network segment generated 9.11 billion yuan, down 0.3% year-on-year, with a gross margin of 27.1%, up 3 percentage points. The power grid construction segment saw a revenue increase of 36.4% to 16.74 billion yuan, maintaining a gross margin of 15%. The marine segment's revenue dropped by 48.9% to 3.74 billion yuan, with a gross margin of 26.7%, down 7.12 percentage points. The renewable energy segment grew by 119% to 7.21 billion yuan, with a gross margin of 11.4%, up 0.38 percentage points [7][8]. Future Outlook - The company is expected to see a recovery in profitability as product mix improves. The gross margin for 2023 was 16.2%, down 2.1 percentage points, while the net margin was 7.2%, down 1.3 percentage points. For Q1 2024, the gross margin was 18%, down 0.3 percentage points year-on-year but up 4.1 percentage points quarter-on-quarter [7][8]. - The company has announced a second employee stock ownership plan, which is expected to boost confidence among management and key personnel [7][8]. Profit Forecast - The forecast for net profit attributable to shareholders for 2024-2026 is 3.649 billion yuan, 4.182 billion yuan, and 4.685 billion yuan, respectively, with corresponding year-on-year growth rates of 17%, 15%, and 12%. The price-to-earnings ratios are projected to be 14x, 12x, and 11x [8].