Event: at the executive meeting of the State Council held on September 14, in order to enhance energy security capacity and promote green development, the meeting decided to approve four nuclear power units in Zhangzhou Phase II in Fujian Province and Lianjiang Phase I in Guangdong Province.
Nuclear power / thermal power approval has been accelerated under guaranteed supply pressure, and the equipment side is expected to recover: the nuclear power industry has made steady progress since nuclear power approval was restarted in 2019, with 4 units, 4 units and 5 units approved respectively from 2019 to 2021. The progress of nuclear power approval has been further accelerated since this year. Since the first half of this year, six units of Sanmen Phase II, Haiyang Phase II and Lufeng Nuclear Power have been approved at one time. This time, a total of four units in Zhangzhou Phase II and Guangdong Lianjiang Phase I have been approved at one time. This year, the approved number of nuclear power projects in China has greatly exceeded that of previous years, and the previously proposed "active and orderly development of nuclear power" has been fully realized. Under the demand for guaranteed supply and energy transformation, the progress of nuclear power approval is expected to continue to accelerate. Thermal power investment affected by overcapacity in the thermal power industry showed a downward trend during the 13th five-year Plan period, but since the fourth quarter of 2021, stimulated by the dual factors of energy supply and peak shaving demand, thermal power investment has ushered in an inflection point. In 2021 and the first half of 2022, China's thermal power investment increased by 21.5% and 71.8% respectively compared with the same period last year, while thermal power approval increased significantly in the fourth quarter of last year. Nuclear power and thermal power sector investment in the context of upstream equipment is expected to give priority to benefit.
The company's deep ploughing of nuclear power / thermal power condensate treatment is expected to fully benefit from the accelerated investment in the industry:
The company has been deeply ploughing nuclear power and thermal power condensate for many years, and is a national specialized and new "little giant".
Enterprises have a high market share, mainly for large central power generation enterprises such as China Nuclear Power Corporation, Huaneng Group, Datang Group and National Energy Group, as well as major local power generation groups. at present, hundreds of sets of water treatment projects have been provided with system design, equipment integration and other products and technical services. According to the prospectus, the company has a market share of about 28.7% in the field of condensate treatment system equipment for nuclear power and 10.47% in the field of condensate treatment system equipment for thermal power. The main competitors in the industry are only CLP Environmental Protection, Huadian Water and CLP Canada. Since 2020, the delivery cycle of the company affected by the epidemic has been extended, the price of raw materials has risen, the company's profits have declined, and the company's main business is expected to pick up under the background of accelerated investment in nuclear power and thermal power.
There is a broad space for the development of new business fuel cell engines: the company has developed rapidly since the establishment of the hydrogen fuel cell engine system team in 2021: from a technical point of view, the company's HYPSR-01 fuel cell system prototype has been tested by the National New Energy vehicle quality Supervision and Inspection Center in the second half of 2021, August 2022. A fuel cell city bus equipped with the HYPSR-04 (70kW) fuel cell engine system developed by the company was selected into the recommended model catalogue for the promotion and application of new energy vehicles issued by the Ministry of Industry and Information Technology. In terms of orders, in addition to the 4 100kW hydrogen fuel cell engine orders signed between the company and Xinfang heavy Industry (totaling 4.2 million yuan) disclosed in the previous annual report, Xiamen Jinlong Company plans to purchase a total of 370 60kW hydrogen fuel cell engine systems, 305 100kW hydrogen fuel cell engine systems and 180 150kW hydrogen fuel cell engine systems from the company in the next three and a half years. At the same time, the company has signed a "letter of intent" with Geely New Energy Commercial vehicle Group Co., Ltd., and the new business has broad prospects for development. At present, the company is raising funds to expand the fuel cell engine project. after full production, the annual production capacity will reach 5000 sets, and according to the company's estimate, the annual income is expected to reach 1.63 billion yuan at full production.
Investment advice: we have raised our profit forecast due to the accelerated recovery of the main industry and the rapid progress of fuel cell engines in superimposed new business due to the accelerated recovery of nuclear / thermal power investment. We estimate that the company's income from 2022 to 2024 will be 448 million yuan, 677 million yuan and 1.074 billion yuan respectively, with growth rates of 6.6%, 51.1% and 58.7% respectively, and net profit of 38 million yuan, 67 million yuan and 169 million yuan respectively, with growth rates of 4.5%, 75.8% and 150.8% respectively. Outstanding growth; maintain the Buy-An investment rating, the 6-month target price is 20.8 yuan.
Risk hints: policy promotion is not as expected, downstream demand is not as expected, and project delay risk.