Strengthen the foundation and expand the source, extend the industrial chain to stimulate growth vitality. Fu an shares was established in 2004, the traditional main business is large steel castings, the acquisition of Liaoning Metallurgical Design and Research Institute in 2019 cut into the field of environmental protection engineering, the company's foundry business and environmental protection engineering dual main business model at the present stage. After the company cut into the field of environmental protection engineering, its performance has obviously increased. In 2020, the company's total revenue was 882 million yuan, an increase of 7.23%, including 324 million yuan for foundry business and 528 million yuan for environmental protection business. The company will still expand and extend new areas. Liaoning Fusan Gas Turbine Co., Ltd. was established in 2017, mainly engaged in gas turbine sales. In December 2021, it announced that it planned to participate in the investment in the establishment of Sichuan Rui an New Materials Technology Co., Ltd., with a proposed stake of 49%. Cut into the field of lithium anode materials, the company gives play to the synergy advantages of the industrial chain, extension to stimulate growth vitality.

Cut into the field of lithium anode materials and open up the space for growth. The company plans to cooperate with Bertre to set up a lithium anode material subsidiary and to build a 100000-ton lithium battery anode material precursor and finished product line. With the general trend of global automobile electrification, the permeability of new energy vehicles continues to increase, and the demand for driving power batteries and anode materials keeps growing at a high speed. The graphitization capacity of the joint venture anode material project between the company and Beitri is provided by Tianquanfu saddle, a subsidiary of the group. The core advantages of negative materials business are reflected in two aspects, one is strong graphitization technology, the other is rich experience in management industry, and the other is obvious cost advantage. Tianquanfu saddle has the advantage of integrated production of graphite. At the same time, negative materials and graphitization capacity are distributed in areas with lower energy costs, leading equipment technology, production efficiency, equipment input and energy consumption to further consolidate cost advantages.

The business of gas turbine is actively expanded and there is a broad space for growth. In 2017, we invested in the establishment of a gas turbine company and cut into the field of gas turbine. The company introduces the advanced manufacturing technology and expert team of Russian industrial gas turbine to independently develop and produce industrial gas turbine used in distributed energy field in China. It can provide low-cost and high-profit core power equipment and energy station solutions for the distributed energy market. It has the advantages of high efficiency, low cost, adapting to the change of heat load, and strong international competitiveness. The shareholders of gas turbine subsidiary all have profound technical background. We believe that under the double-carbon background, distributed energy is an important application direction of light gas turbine and will be the core driving force for the rapid growth of light gas turbine demand. The company continues to strengthen product competitiveness by introducing overseas R & D teams and implementing equity bindings. At the same time, benefit from the synergy of casting business, and the cost advantage is further enhanced. We expect the company's gas turbine business to achieve rapid growth during the 14th five-year Plan period.

The business of environmental protection engineering will consolidate its advantages and benefit from the continuous progress of industrial emission reduction. In 2019, we acquired the Design Institute and cut into the field of environmental protection engineering. The company's environmental protection engineering business is to provide energy saving and emission reduction solutions for the industrial sector. Looking forward to the 14th five-year Plan, industrial energy conservation and emission reduction will still be promoted in an orderly manner, and ultra-low emission requirements will drive replacement investment. in addition, the increased demand for flexible transformation of thermal power plants is also expected to create new growth points. Under the background of promoting the adjustment of energy structure, speeding up the adjustment of industrial structure, and promoting the construction of a resource-saving and environment-friendly society, emission reduction and energy-saving industries play an important role in realizing cleaner production and developing circular economy in basic industries such as electric power, metallurgy and petrochemical industry, which are supported and encouraged by national environmental protection policies and industrial policies. Since 2015, China has carried out supply-side reform in the iron and steel industry, and the profitability of the industry has continued to improve. In 2019, the Ministry of Ecology and Environment and other departments jointly issued the "opinions on promoting the implementation of Ultra-low Emission in the Iron and Steel Industry" to boost the demand for steel capacity transformation in the next five years, while the improvement of corporate profits is conducive to the implementation of capacity transformation investment. The company's environmental engineering business has great advantages in technology, project experience, management experience, cost and operating qualifications, and is expected to fully benefit from the dual-carbon trend.

Profit forecast and investment rating: we expect the company's net profit from 2021 to 2023 to be 71 million yuan, 169 million yuan and 300 million yuan respectively, with a corresponding EPS of 0.23 yuan per share, 0.55 yuan per share and 0.98 yuan per share, and the corresponding share price PE is 104,43 and 24 times respectively. Cover for the first time, giving the company a "buy" rating.

Stock price catalyst: the installed capacity of power batteries has grown faster than expected, and progress has been made in the expansion of new business areas.

Risk factors: the risk of new business expansion falling short of expectations, the risk of aggravating market competition, the risk of repeated epidemic situation, the risk of rising prices of raw materials, and so on.