Incident: The company issued an announcement. Since September 21, the company's full name has changed from “COFCO Engineering Technology Co., Ltd.” to “COFCO Science & Technology Co., Ltd.”; since September 22, the company's stock abbreviation has changed from “COFCO Engineering” to “COFCO Science and Technology”; the stock code remains unchanged.
Comment: This change in the company name and stock abbreviation can more accurately reflect the company's core business.
The new company name is more in line with the company's existing business structure and can more accurately and intuitively reflect the company's core business; the new company name can more clearly reflect the company's professional ability and technical advantages; and the new company name can more clearly reflect the company's development strategy.
In the first half of the year, there was a sharp increase in revenue performance, and there was a significant increase in on-hand orders. The company achieved revenue of 1,023 million yuan in 2022H1, an increase of 44% over the previous year, and achieved net profit of 72.23 million yuan, an increase of 39.36%.
The company has increased its market development efforts through various measures, and the increase in on-hand orders has boosted the improvement of performance.
The company is actively investing in mergers and acquisitions around its main business and industrial chain. The revenue of two equipment manufacturing companies, Shandong Yingchun and Huzhou Yingchun, which were merged at the end of 2021, was reflected, bringing new growth to the company.
The company's business structure continues to be optimized, and the share of engineering contracts continues to decrease. 2022H1's four main businesses, design consulting, mechanical and electrical engineering system delivery, engineering contracting, and equipment manufacturing, accounted for 22.1%, 32.4%, 6.3%, and 35.8% of revenue, respectively. Influenced by factors such as the introduction of the “General Contracting Management Measures” in March 2020, the company continuously adjusted product positioning, optimized the product structure, and reduced the number of new general engineering contracting businesses. The share of engineering business continued to decline, from 41% in 2019 to 6.3%.
The gross margins for design consulting, mechanical and electrical engineering system delivery, engineering contracting, and equipment manufacturing in 2022H1 were 42%, 9%, 2%, and 16%, respectively. The gross margin of the company's engineering contracting business is low, and the shrinking scale helps the company optimize its product business structure.
The grain and oil industry has an incremental market and demand for transformation and upgrading, and the scale of the downstream cold chain industry continues to grow.
In June 2021, the state issued a series of documents such as “Opinions on Further Promoting High Quality Grain Projects”. On the one hand, it provides market growth space for the downstream grain and oil industry. On the other hand, grain and oil processing and warehousing are developing towards standardization, refinement, intelligence, and high-end, and there is a large demand for technical upgrades in stock production capacity. In 2022, many cold chain logistics development plans were introduced one after another, providing clear solutions for project implementation and financial support, and further promoting the development of the industry.
Covered for the first time, giving the company a “increase in holdings” rating. The company's net profit from 2022 to 2024 is expected to reach 2.7, 39, and 550 million yuan respectively, up 64%, 48%, and 40% year-on-year, corresponding to valuations of 27, 18, and 13 times.
Risk warning: downstream demand falls short of expectations, valuation and profit forecasts fall short of expectations
