Description of the event
The company released its 2022 annual report, achieving annual revenue of 1,555 million yuan, an increase of 8.97%; achieving net profit of 284 million yuan, an increase of 27.89%; and net profit of non-return mothers was 234 million yuan, an increase of 38.15%.
Incident reviews
Environmental monitoring system+ system transformation and operation and maintenance is the main source of revenue growth, and thermal power+carbon monitoring is expected to drive the scale of environmental monitoring business to continue to rise. By sector, the company's environmental monitoring system achieved sales revenue of 861 million yuan, an increase of 20.27%; the industrial process analysis system achieved sales revenue of 90 million yuan, a decrease of 30.83%; the gas analyzer and spare parts business achieved sales revenue of 206 million yuan, which was basically the same as the previous year; the system transformation and operation and maintenance business achieved sales revenue of 319 million yuan, an increase of 38.68%; the energy saving and environmental protection engineering business achieved sales revenue of 29.31 million yuan, a decrease of 70.08% from the same period last year. The environmental monitoring system business is the company's core business. Looking forward to the future, the power industry stock update+new thermal power installation+the gradual maturity of the carbon monitoring market is expected to drive the environmental monitoring system business.
Gross margin increased year over year, and expenses were properly managed. The company's gross margin increased by 3.03pct to 46.45% for the full year of 2022, mainly because the gross margin of the environmental monitoring system increased by 2.74pct to 49.70%, and the cost rate for the period decreased by 2.53pct to 27.22%. Among them, the sales expense ratio decreased by 1.2pct to 11.37%; the management expense ratio decreased by 0.33pct to 8.95%; the R&D expense ratio decreased by 1.02pct to 6.44%; and the financial expense ratio increased 0.01pct to 0.46%.
Operating cash flow declined slightly, and investment cash flow increased significantly. The company's net operating cash inflow for the year was 205 million yuan, a decrease of 29 million yuan over the previous year; the net inflow of investment cash was 529 million yuan, an increase of 682 million yuan over the same period last year, mainly because the cumulative amount of cash management products recovered by the company was far greater than the same period last year. Among them, the payout ratio decreased by 9.42 pct and 2.21 pct to 78.01% and 54.15%, respectively.
Brands and customers have brought a first-mover advantage in carbon monitoring, and the operation and maintenance network has covered the whole country. As a pioneer and leader in the domestic environmental monitoring and analytical instrument market, the company is also one of the pioneers in carbon emissions and greenhouse gas monitoring. It has developed various online and portable greenhouse gas products such as non-dispersive infrared, Fourier-infrared spectroscopy and chromatography, which can be applied to greenhouse gas monitoring of pollution sources and ambient air. At the same time, the company's main customer groups cover the fields of electricity, building materials, steel, petrochemicals, chemicals, etc. These fields are also the main subjects of carbon emissions and carbon trading, so the company has an innate customer base advantage in developing carbon emissions related business. Furthermore, the company is one of the earliest enterprises in the industry to carry out third-party operation services. It has a nationwide operation and maintenance network, a complete service management system, rich operation and maintenance experience, and a strong third-party operation and maintenance team.
Profit forecasting and valuation
It is estimated that in 2023-2025, the company's operating income will be 1,727/19.79/2,263 million, respectively, with a year-on-year growth rate of 14.77%/14.57%/14.37% respectively; the net profit of the parent mother will be 3.38/392/450 million yuan respectively, with a year-on-year growth rate of 19.07%/16.09%/14.67% respectively. Looking at the valuations of comparable companies in the same industry over the next two years, Sydillon is at a low level. The company's 2023-2024 performance corresponding to PE was 15.54 and 13.38 times, respectively. It was covered for the first time, giving it an “increase in holdings” rating.
Risk warning:
The pace of implementation of carbon monitoring policies fell short of expectations; new installed capacity of thermal power fell short of expectations; profit forecasts and valuations fell short of expectations