The company reported higher-than-expected growth, accelerated cleaning of revenue structure, and on-hand orders continued to thicken. To raise the company's profit forecast, it is estimated that in 2021-22-23, the EPS will be 0.76 PE 0.890.92 yuan, giving the company 25 times PE in 2021 as a reasonable valuation, corresponding to the target price of 19 yuan, and giving the company's Hong Kong shares 15 times PE in 2021 as a reasonable valuation, corresponding to the target price of HK $13.73, maintaining the "buy" rating.
The performance continues to grow high, and the profitability is robust under the impact of the price of bulk raw materials. The company released 21H1 medium report, realizing operating income of 22.737 billion yuan (+ 28.07% yoy), net profit of 1.338 billion yuan (+ 41.27%yoy), and non-return net profit of 1.228 billion yuan (+ 24.96 yoy). Among them, 21Q2 realized operating income of 11.866 billion yuan (+ 24.08% yoy,+9.15% qoq), net profit of 715 million yuan (+ 28.07% yoy,+13.01% qoq), and non-return net profit of 590 million yuan (+ 10.14% yoy,-7.40% qoq). During the reporting period, the company's sales gross profit margin / net profit rate was 18.02% / 6.48% respectively, compared with the same period last year-0.96 pct. During the same period, the expense rate was basically stable at 13.08%. Except for the increase in sales expense rate and 0.80pct, the management / R & D expense rate decreased to a certain extent.
The transformation of the business structure has accelerated, and clean energy equipment has become the largest source of income. During the reporting period, the company's main business areas-- clean and efficient power generation equipment / renewable energy equipment / modern manufacturing services / engineering and trade / emerging growth industries-- accounted for 27.22%, 34.62%, 10.40%, 11.33%, 16.43%, respectively. Compared with the historical composition, renewable energy equipment continues to develop rapidly and has become the company's business unit with the largest contribution to revenue. Under the background of "double carbon", the sustainable development of wind power, the continuous promotion of hydropower (pumped storage) and the steady construction of nuclear power are conducive to the acceleration of the transformation of the company's business structure to clean energy, and the momentum of long-term development is increasing day by day.
The demand of the industry is steady and good, and the "double carbon" is good for long-term development. The company added effective orders of 34.392 billion yuan (+ 32.85% yoy) during the reporting period, and the continuous rich orders on hand are gradually becoming an important guarantee for the healthy development of the company in the future. With the acceleration of the clean transformation of the company, the industry demand also maintained a good growth trend in the first half of the year. The electricity consumption of the whole society of 21H1 increased by 16.2% compared with the same period last year, with an average growth of 7.6% in two years. The power supply project of the country's major power generation enterprises completed an investment of 189.3 billion yuan, an increase of 8.9%. Energy equipment in the "double carbon" construction trend, the continuous release of industry demand, for structured transition companies, continue to provide good performance.
Risk factors: the target of "double carbon" falls short of expectations, power investment fluctuates, thermal power installation is reduced on a large scale, nuclear power construction slows, competition in the wind power market intensifies, raw material prices rise sharply, and overseas markets do not advance as expected.
Investment suggestion: according to the fullness of the company's on-hand orders and the improvement of the downstream boom, we raise our profit forecast. It is estimated that the annual EPS of 2021-22-23 will be 0.76 pounds 0.89 pounds 0.92 yuan (the original forecast is 0.65 pounds 0.74 pounds 0.83 yuan), and the current share price corresponds to 16.5 times of PE 19.9 pounds 17.0 pounds. Combined with the historical valuation level of the company in the stage of large-scale energy construction, the company is given a reasonable valuation of 25 times PE in 2021, corresponding to the target price of 19 yuan and maintaining the "buy" rating; considering the difference between H shares and A shares in the valuation system, the company's Hong Kong shares are given a reasonable valuation of 15 times PE in 2021, corresponding to the target price of HK $13.73 and maintaining the "buy" rating.