Event: Sunrise Oriental released its mid-2022 report. The company's 2022H1 realized income of 1.74 billion yuan, and YoY-6.1%; realized performance of-20 million yuan, compared with 30 million yuan in the same period last year. Converted to 2022Q2 realized income of 1.09 billion yuan in a single quarter, YoY-4.1%; realized performance of 40 million yuan, YoY-31.6%. Affected by the epidemic, the company's Q2 revenue and performance declined. Considering entering the peak sales season of air energy products in the second half of the year, we have positive expectations for the operation of the company.
Affected by the epidemic, the company's revenue declined: according to the announcement, due to the impact of the epidemic, 2022H1's Lianyungang base (involving solar energy, air energy and other products) stopped production for nearly a month, logistics was blocked, and product delivery was delayed, which had a great impact on revenue. From a business point of view, 2022H1 Sunrise Eastern Air Energy business achieved revenue of 240 million yuan, accounting for 13.8% of total revenue (similar to the proportion in 2021). According to customs data, 2022H1 China's air energy heat pump export value of 580 million US dollars, YoY+63%. We believe that the European environmental subsidy policy has a long-term pulling effect on the development of the air energy industry; in the short term, rising energy prices in Europe also have a catalytic impact on air energy sales. With the arrival of the export season in the second half of the year, we expect Sunrise Eastern Air Energy business to perform better and the revenue side is expected to improve.
Q2 company performance decline: we believe that Sunrise Oriental Q2 performance declined because: 1) due to the impact of raw material prices, the company Q2 single-quarter gross profit margin of 29.4%, year-on-year-3.1pct. 2) due to the implementation of equity incentives, share payment amortization expenses increased compared with the same period last year, affecting the 2022H1 performance of 15.12 million yuan. Looking ahead to 2022H2, we believe that the company's profitability is expected to improve. On the one hand, the impact of the epidemic gradually faded, the company's production resumed, and the scale effect appeared. On the other hand, the demand for air-powered heating products in Europe is increasing, and export prices are expected to rise and improve profitability. According to customs data, the average export price of 2022H1 air energy heat pump in China is YoY+29%.
Investment suggestion: we expect the solar water heater and kitchen electricity business of Sunrise East to develop steadily and the air energy business to grow at a high speed. We estimate that the company's EPS in 2022-2023 will be 0.31 pound 0.37 yuan, covering it for the first time and giving it a Buy-An investment rating.
Risk hint: the RMB appreciates sharply and the price of raw materials rises.
