Smart heating takes the lead, maintaining the "buy" rating
The company is an intelligent heating leader, the company continued high growth in the third quarter of 2022, with policy support, the industry demand continues to improve, the company has sufficient momentum for growth. We keep the profit forecast unchanged. We expect the net profit from 2022 to 2024 to be 2.24,3.03,405 million yuan, and EPS 3.01,4.07,5.44 yuan. The current stock price is 21.2,15.7,11.7 times corresponding to PE, maintaining the "buy" rating.
Event: the company releases its third quarterly report for 2022
In the first three quarters of 2022, the company achieved revenue of 173 million yuan (year-on-year + 37%), return net profit of 35.16 million yuan (year-on-year + 190%), and non-return net profit of 3.67 million yuan (year-on-year). In the third quarter, the revenue was 77.27 million yuan (year-on-year + 39%), the return net profit was 15.96 million yuan (year-on-year + 333%), and the non-return net profit was 5.86 million yuan (+ 162% year-on-year). The company had sufficient orders on hand, and the company's revenue continued to grow at a high rate in the third quarter; the profit growth rate increased significantly compared with the previous quarter, mainly due to the improvement of gross profit margin in the third quarter, which increased by 15.4% and 7.9% respectively to 62.1%.
The demand of the industry continues to improve, and the growth momentum of the company is sufficient.
(1) there is a strong demand for the transformation of old residential areas. The transformation of old urban residential areas is not only an important livelihood project, but also an important measure to expand investment to stimulate domestic demand, which is highly valued at the national level. In June 2022, the State Council issued the implementation Plan for the Aging and Renewal of Urban Gas Pipelines (2022 / 2025), requiring that the aging and renovation of urban gas and heating pipelines should be speeded up, and that it should be started as soon as possible in 2022 and basically completed by the end of 2025.
Driven by the policy, there is a strong demand for the transformation of the heating system in the old residential area.
(2) the source of funds for heating projects is sufficient. The downstream customers of the company are local thermal companies, and the funding sources of heating transformation include customer-owned funds, special debts and urban transformation funds. The thermal power company has stable cash flow and strong ability to pay. In its previous guidance, the State Council pointed out that the central finance will focus on supporting basic reforms such as heating, and with policy and financial support, the industry is expected to maintain a high boom.
(3) the company has plenty of orders on hand. In May, the company signed a large order of 247 million yuan with Zaozhuang Thermal Power Company to verify the prosperity of the industry. As of the first half of the year, the amount of unfulfilled orders signed by the company reached 490 million yuan, accounting for 92% of the 2021 revenue. There are plenty of orders on hand, providing sufficient momentum for future growth.
Risk hint: the risk of industrial policy change; the risk of technology development; the risk aggravated by market competition.