SMHC(SH:600131) Guoxin Securities·2024-06-02 07:00Investment Rating - The report assigns an "Outperform" rating for the company [1][3][23] Core Insights - The company experienced stable performance in 2023, with revenue of 7.673 billion yuan (+0.76%) and a net profit of 0.828 billion yuan (+3.43%). However, Q1 2024 saw a significant decline in revenue to 1.019 billion yuan (-22.98%) and net profit to 0.012 billion yuan (-83.22%) due to project delivery impacts [1][8][22] - The digitalization of the power sector is expected to accelerate, with the company positioned to benefit from the ongoing reforms in the electricity system [1][19][23] - The company’s gross margin has shown a steady increase, reaching 21.56% in 2023, while various expense ratios have risen due to stable revenue [1][13][21] Summary by Sections Financial Performance - In 2023, the company achieved a revenue of 76.73 billion yuan and a net profit of 8.28 billion yuan, with a notable recovery in Q4 [1][8][22] - Q1 2024 results showed a revenue drop to 10.19 billion yuan and a net profit of 0.12 billion yuan, primarily due to reduced income from integrated procurement and delayed project confirmations [1][8][22] Business Segments - The company operates in three core business areas: - Power Digitalization Services, which generated 20.56 billion yuan in revenue (+24.46% YoY) [1][20] - Enterprise Digitalization Services, which saw a decline to 19.55 billion yuan (-4.59% YoY) [1][20] - Cloud Network Infrastructure, which also faced a revenue drop to 36.39 billion yuan (-6.57% YoY) [1][20] Future Outlook - The company is expected to benefit from the acceleration of electricity system reforms, with projected net profits of 10.03 billion yuan, 11.52 billion yuan, and 13.20 billion yuan for 2024, 2025, and 2026 respectively [1][23][22] - The report anticipates revenue growth rates of 11.1%, 12.4%, and 11.7% for the next three years [1][21][22] Valuation - The report suggests a conservative valuation range of 19.92 to 21.58 yuan based on a PE ratio of 24-26 times for the years 2024-2026 [1][23][22]