The construction base was solid. Revenue increased 17.7% in 2022, and net profit of the mother increased 19.2%. The company achieved revenue of 16.90 billion yuan for the full year of 2022, an increase of 17.7% over the previous year, and achieved net profit of 3.9 billion yuan to its mother, an increase of 19.2% over the previous year, maintaining a rapid growth trend. By business, the company's engineering construction business revenue increased 20.9%, and power generation business revenue increased 5.5%. Benefiting from a boom in infrastructure investment, the company's engineering and construction business supported high overall revenue growth.

Ongoing orders are sufficient, and there is a guarantee that construction revenue will continue to grow. By the end of 2022, the company had signed a construction amount of 36.3 billion yuan for unfinished construction projects, won the bid for construction projects that had not yet been signed, the construction amount for unsigned construction projects increased by 12.7 billion yuan, and the order guarantee multiplier (year-end on-hand orders/annual project revenue) rose from 244% to 286%, reflecting the company's current sufficient inventory of on-hand projects and the continuous growth of construction revenue.

The installed scale of power generation has increased at an accelerated pace, creating the second growth pole for the company's development. By the end of 2022, the total grid-connected installed capacity of the company's power generation business was 2035 MW. As of the publication date of the annual report (March 29, 2023), the total grid-connected installed capacity was 2120 MW. The company's on-hand framework agreement involves an installed scale of more than 10 GW. Subsequently, as project approval and research work continues to advance, the company is expected to launch a large number of new energy power generation projects in the next 1-2 years. The company plans to start clean energy production of 3,200 WM in 2023.

Subsidies have declined, feed-in electricity prices have declined, and the overall trend of power generation revenue growth has not changed. In 2022, the company's feed-in electricity volume was 3,773 million kilowatt-hours, an increase of 7.4% over the previous year. The average feed-in price dropped from 0.543 yuan/kwh to 0.473 yuan/kwh. However, grid-connected projects in the second half of 2022 will concentrate on contributing to electricity generation in 2023, and the new installed capacity is expected to continue to increase rapidly in 2023. The company's overall power generation capacity will continue to grow rapidly, and there is a high degree of certainty that power generation revenue will continue to grow.

The transfer of the assets of the Construction Engineering Group was completed, and the main engineering business was strengthened. On January 6, 2023, the company completed the asset transfer and commercial change registration of the Construction Engineering Group, and the additional shares were listed and traded on the Shenzhen Stock Exchange on February 13, 2023. On the one hand, the company's integration of the Construction Engineering Group will greatly increase the scale of assets, integrate customer resources and supplier resources, and the gross margin of the company's engineering construction business is expected to increase.

Investment advice: Maintain profit forecasts and maintain “increase holdings” ratings. The company's revenue growth rate for 2023-2025 is 13.2%/10.0%/9.1%, the net profit growth rate is 22.7%/15.2%/15.1%, the corresponding EPS is 0.40/0.46/0.53, and the corresponding price-earnings ratio is 21.2/17.8/15.6. Considering that the assets of the Construction Engineering Group were transferred in 2023, the valuation level is expected to decline. The reasonable valuation range for 2023 was adjusted to 7.75-8.89 yuan to maintain the “increase in holdings” rating.

Risk warning: The implementation of the framework agreement for power generation projects falls short of expectations, the risk of relatively concentrated operating areas, the risk of rising financing costs, and the risk of failure to raise supporting capital will increase.