Key points of investment

This Friday (March 31), “Hengshang Energy Saving”, a company listed on the main board, asked for a quote.

Hengshang Energy Saving (603137): The company's business covers product development, engineering design, processing and production, installation and construction, after-sales service, etc. of curtain walls and windows. The project types cover curtain wall and door and window projects for various types of buildings such as high-end office buildings, commercial complexes and residential buildings. The company achieved operating income of 1,674 million yuan/2,067 billion yuan/1,944 million yuan respectively in 2020 and 2022, YOY was 28.47%/23.49%/-5.99% in that order, and the three-year revenue compound annual growth rate was 14.25%; achieved net profit of 77 million yuan/89 million yuan/118 million yuan, YOY was 46.75%/15.03%/32.08% in that order, and the three-year compound annual growth rate of Fumo's net profit was 30.64%. According to preliminary forecasts, the company expects to achieve net profit of 53.5 million yuan to 66 million yuan from January to 2023, a decrease of 11.63% or an increase of 9.02% over the same period in 2022.

Investment highlights: 1. The company is the number one enterprise in China's building curtain wall industry, with rich customer resources and current orders. The company has established and maintained relatively stable cooperative relationships with large enterprises such as Shanghai Construction Engineering, China Construction, and Poly Development. During the reporting period, the company's sales from these major customers (top five) increased steadily year by year, accounting for more than 75% of operating income each year. With high-quality customer resources, the company has built regionally representative curtain wall projects such as the Shanghai Stock Exchange Jinqiao Technology Center curtain wall project, the 10th China Flower Fair (Fuxing Hall) curtain wall project, and the Rafael Cloud Gallery (Yangtze River Delta G60 Science and Technology Innovation Corridor) curtain wall project. It has established a good reputation in the industry and has gradually become the number one enterprise in China's construction and curtain wall industry; as of June 30, 2022, the company has started uncompleted inspection projects with a relatively large amount (tax included) of 254.81958 million yuan, with orders and reserves of projects on hand. 2. Based on the leading edge of the Yangtze River Delta region, the company's business area has successfully radiated to regions such as the Pearl River Delta. During the reporting period, the company's business outside of Shanghai and Jiangsu provinces accounted for 9.22%, 14.08%, 28.57% and 22.09% respectively. The business area has been successfully expanded to South China, Central China, Northwest China, Southwest China, and the revenue scale has continued to grow. Among them, Guangdong Province, as the Pearl River Delta region with high economic vitality, grew rapidly in 2020-2021, achieving 72,5894 million yuan and 29.967 million yuan respectively, which became one of the main driving forces of the company's performance growth. In order to further consolidate the business in the Pearl River Delta region and South China, the company plans to build an intelligent curtain wall production base in Jiangmen, Guangdong through a fund-raising project to lay the foundation for the continuous development of the company's business.

Comparison of listed companies in the same industry: Jianghe Group, Gold Mantis, Colida, Yaxia Co., Ltd., and Fangda Group were selected as comparable listed companies of Hengshang Energy. Looking at the comparable companies mentioned above, the average revenue scale of the industry from the fourth quarter of 2021 to the third quarter of 2022 was 12.038 billion yuan, the comparable PS-TTM (arithmetic average) was 0.78X, and the gross sales margin was 12.77%. In comparison, the company's revenue scale was in the lower middle range of the same industry, but the gross margin was higher than the average of the industry.

Risk warning: There is still a possibility that companies that have begun the inquiry process will not be able to go public due to special reasons. The company content is mainly based on the content of prospectuses and other public information, there is a risk that the selection of listed companies in the same industry is inaccurate, there may be interpretation biases in the content of the content data, and the risks of specific listed companies are shown in the content of the text.