Incident: On the evening of October 26, Henghua Technology released its report for the third quarter of 2022. During the reporting period, the company achieved revenue of 322 million yuan, a year-on-year decrease of 19.15%, and net profit attributable to shareholders of listed companies was 2.0423 million yuan, a year-on-year decrease of 66.13%.
After years of R&D accumulation, the BIM underlying platform has become autonomous and controllable: since its establishment, the company has always adhered to the “independent R&D, autonomous and controllable” R&D route. After years of R&D accumulation and application experience in the power industry, it has now accumulated core technologies covering the field of BIM software, the digital field of power grid engineering, and the field of IoT. The company actively seizes new energy development opportunities, increases R&D and market expansion efforts for new energy 3D design software such as 3D photovoltaic power plant design software and 3D wind farm design software, and combines the advantages of new energy design consulting to speed up the seizure of market share. At the same time, the company is actively exploring the application of technology related to virtual power plants and related business markets.
Henghua 3D circuit design software has a market share of over 50%. It is a well-deserved leading company for power system BIM software in China: the company actively grasps major market opportunities such as the rapid development of new energy under the national dual carbon target and the construction of “East and West Computing” projects, applies a series of self-developed 3D design products, in-depth development of power grid design consulting and other related businesses, and increases market development in the new energy fields such as main network planning and design, photovoltaics, wind power, energy storage, integrated energy, etc. Henghua Technology's autonomous and controllable BIM software products and services were applied to national key projects such as the Baihetan-Jiangsu DC Project and were well received by users.
The company's performance is at risk of normalization of the epidemic, and there is some volatility: since this year, local epidemics have occurred frequently across the country, and the company's suppliers, customers and other stakeholders have also been affected to varying degrees, causing the company to have some delays in procurement, production, sales, personnel transfer, etc., and the company's production and operation are facing certain risks.
Investment advice: We forecast that the company's net profit for 2022-2024 will be 0.62/0.71/82 million yuan, corresponding to 2022-2024 EPS of 0.10/0.12/0.14 yuan respectively. The current stock price corresponding to PE is 89/78/67 times, respectively. Considering the scarcity of high-quality targets for domestic power system BIM software, domestic substitution promotion and new energy distributed power generation, we continue to be optimistic about the company's future development.
Risk warning: the risk of changes in the competitive pattern of the industry; the impact of the epidemic; the risk that the advancement of emerging businesses falls short of expectations; the progress of domestic substitution falls short of expectations.