The company announced the annual report of 2021, achieving operating income of 47.819 billion yuan (+ 28.26% yoy) and net profit of 2.289 billion yuan (+ 22.93% yoy). The company's performance is in line with expectations; after intensive policies and planning in the first quarter of 2022, power project construction has gradually ushered in the landing period, continuing to be optimistic about the company's benefits as the leading comprehensive power equipment leader in China, and maintain the "buy" rating of Awarh shares.
The performance is in line with expectations, and the income structure continues to be adjusted. The company announced its annual report of 2021, with operating income of 47.819 billion yuan (+ 28.26% yoy, slightly exceeding expectations), net profit of 2.289 billion yuan (+ 22.93%yoy, basically in line with expectations), and net profit of 1.763 billion yuan (+ 15.31% yoy) during the reporting period. As the leading comprehensive energy equipment leader in China, the company further accelerated the adjustment of business structure during the reporting period, of which renewable energy equipment revenue grew by more than 50% (wind power increased by about 70%). The proportion of renewable energy equipment in new effective orders increased to 29.4%. The continued growth of new orders further lays the foundation for the company's sustainable development, with 56.392 billion yuan (+ 14.15% yoy) in new orders in 2021 and 81.6 billion yuan in-hand orders by the end of 2021.
Profitability is affected by structure, and it is judged that it will enter the repair channel in the medium and long term. The adjustment of income structure has also caused changes in profitability to some extent. Affected by the rapid increase in the proportion of revenue from businesses such as wind power, the company's sales gross profit margin has been adjusted to 17.29% (- 3.06 pcts) in 2021. However, due to the ability of cost-side management, the expense rate decreased by 2.79 pcts during the reporting period; on this basis, the net interest rate remained relatively stable at 5.20%. Looking forward to the changes in profitability in the future, it is expected that with the "14th five-year Plan"
In the middle and later period, the balanced development of power plant services, nuclear power, hydropower and thermal power in the company's revenue structure is expected to promote the company's gross profit margin to be repaired on the basis of 2021.
Power construction needs to advance in many fields, and the comprehensive leader is expected to fully benefit. On the basis of reasonable consideration of the demand changes and profit pressure faced by the land wind and sea breeze business in 2022, we believe that further attention should be paid to the prosperity of the overall power investment and the long-term demand of power construction. Under the industry environment of long-term realization path of "double carbon" and continuous acceleration of electric energy replacement, on the one hand, the transformation and speed-up demand represented by the scenic base is expected to become the core of the next stage of power construction; on the other hand, as the power system transformation supporting thermal power transformation service demand, nuclear power and traditional hydropower propulsion, pumped storage construction and other base load power construction demand, it is expected to continue to enhance the prosperity during the "14th five-year Plan" period. In 2021, the investment in power infrastructure construction will be 553 billion yuan (+ 4.5% yoy), a record peak. The demand for various types of power construction and transformation and upgrading is expected to go hand in hand in the future. Considering the company's leading position in the field of base-load power sources such as fire / nuclear / water, as well as the rapid development in the field of new energy represented by wind power, the company is expected to fully benefit from the current cycle of power construction.
Risk factors: the completion of power infrastructure investment is lower than expected; the price game of wind power industry chain intensifies; the approved construction pace of new nuclear power units slows down; the progress of traditional hydropower units and pumped storage construction is not as expected; the prices of bulk raw materials continue to rise.
Investment suggestion: taking into account the persistence of downstream demand and the company's orders, slightly adjust the company's 2022-24 net profit forecast of 29.61, 36.79, and 4.384 billion yuan (the original forecast for 2022-23 is 29.58, 3.5 billion yuan, and the new 2024 forecast), the EPS forecast is 0.95 1.18, the current price of A-share is 15-12-10, and the current price of Hong Kong stock is 7-6-5. With reference to the valuation level of the company during the historical large-scale power construction phase, combined with the company's future performance growth expectations and the industry's core leading position, the company's A shares 30x PE in 2022 is maintained as a reasonable valuation level, corresponding to the target price of RMB28.50; taking into account the valuation system differences and historical valuation differences in the Hong Kong stock market, H shares 15x PE is maintained as a reasonable valuation level, corresponding to the target price of HK $17. Maintain the "buy" rating of the company's H shares