Event: On April 3, 2023, the company released the “2022 Annual Report”. The company achieved revenue of 5.174 billion yuan in 2022, an increase of 34.51% over the previous year, and achieved net profit of 53 million yuan to the mother, a year-on-year decrease of 84.79%. The company's net profit returned to the mother after deduction - 180 million yuan, a year-on-year decrease of 163.41%.
The high-end equipment and environmental protection business was greatly affected by the epidemic. The fourth quarter impairment affected annual performance: the company achieved revenue of 2,255 billion yuan in the fourth quarter of 2022, an increase of 134.68% over the previous year, achieved net profit of -115 million yuan, a year-on-year decrease of 236.28%, and achieved net profit of -343 million yuan after deduction, a year-on-year decline of 793.39%. The impact on the profit side was mainly affected by impairment of goodwill. Looking at the whole year, the company's high-end equipment business continued to grow steadily, but due to the impact of factors such as the epidemic, gross margin declined. The continuation of the epidemic has had a great adverse impact on the market environment of the hazardous waste disposal industry. Market prices for related businesses have dropped markedly, and it is difficult for the company to reverse the declining trend in environmental protection business performance by reducing costs and increasing capacity utilization. The company, Hubei CNPC Youyi Environmental Technology and Greenway Environmental Protection, calculated a total of 481 million yuan in goodwill impairment preparations.
Offshore wind has significant advantages, and strategic cooperation to expand reserve production capacity: In recent years, the installed capacity of offshore wind power in China has continued to grow. The cumulative installed capacity is expected to reach 32.5 million kilowatts by 2022, continuing to rank first in the world in the installed capacity of offshore wind power. Seabreeze tenders for the full year of 2022 reached 17.9 GW (excluding framed tenders), a year-on-year increase of 641.6% compared to 2021. In 2022, Runbang Offshore was rated as one of the top 50 in China's offshore wind industry. The company's wind power foundation pile products have good opportunities for development in this context, and the Haifeng business is expected to bring more orders to the company. In the first half of 2022, the company's wholly-owned subsidiary signed a “Strategic Cooperation Framework Agreement” with the Tongzhou Bay Management Committee to further expand the business layout in the fields of marine engineering equipment, port lifting equipment, ship supporting equipment, etc., expand the production capacity of the company's high-end equipment business, effectively utilize the leading advantages and output effects of the company's domestic and foreign offshore industry, laying the foundation for future long-term development.
The ship support business is developing well, and orders for the material handling business are full: the ship support industry has the characteristics of a large volume, high technology and high added value. Currently, China sees it as a key direction for the transformation, upgrading and structural adjustment of the shipbuilding industry. As a major domestic manufacturer, the company expects good development prospects in the future.
In the company's material handling business, the number of domestic and foreign orders continues to increase, and they will be delivered one after another in the future. At the same time, during the reporting period, the company acquired the container crane business at Kalmar Port, which is expected to further enrich the product line of the company's high-end equipment business based on the development of the original port machinery business, which will help the company further expand the market and increase its business scale and profitability.
Investment advice: The company is a leading foundation pile manufacturer in China. At the same time, demand for the company's ship supporting business is high, and orders for material handling business are full. At the same time, the rapid development of offshore wind power is expected to drive the rapid development of the company's foundation pile business. We expect the company to achieve operating income of 60.52/70.18/8.192 billion yuan in 2023-2025, and net profit of 39/46/ 55 million yuan to the mother. The corresponding PE was 13/11/9 times, respectively, giving an “increase in holdings” rating.
Risk warning: Wind power installations fell short of expectations; delivery of material handling business fell short of expectations; and shipbuilding industry sentiment declined.