In 2013, the company realized operating income of 1.96 billion yuan, an increase of 16.93% over the same period last year, operating profit of 46.88 million yuan, an increase of 99.10% over the same period last year, net profit belonging to the parent company of 401 billion yuan, an increase of 111.10% over the same period last year, and earnings per share of 0.20 yuan. Profit distribution plan: 1.00 yuan (including tax) for every 10 shares.

The transformation of thermal power units is urgent, and the domestic business has increased greatly. The company is one of the few domestic enterprises with complete equipment production capacity of dust removal, desulphurization and denitrification systems for coal-fired boilers of 1 million kilowatts and above. During the reporting period, the company sold 161 sets of environmental protection equipment, an increase of 30.89% over the same period last year. Among them, there is a strong demand for the transformation of domestic projects of more than 600000 kilowatts, and the income of domestic business is 1.797 billion yuan, an increase of 3500% over the same period last year. Overseas business is affected by the unstable development of emerging market economies such as India, and the scale of business has dropped by 54.71% compared with the same period last year. From 2014 to 2015, there are still about 300 million kilowatt units in need of dedusting transformation in China, and the policy gives dedusting electricity price subsidy of 0.2min / kWh, which increases the enthusiasm of enterprises to transform to a certain extent, and there are only a few months left before the deadline of July 1, 2014. the dedusting industry will continue the rapid development of 2013. The company is the leader in the dust removal industry, the current domestic new orders increased by 95.76% year-on-year, the follow-up business growth is worth looking forward to.

Interest expenses decreased and net profit doubled. Affected by competition in the domestic market, the average price of the company's products decreased by 10.03% compared with the same period last year, but during the reporting period, the prices of raw materials such as steel (accounting for about 70% of costs) declined, and the gross profit margin of environmental protection equipment slightly increased by 0.22 percentage points compared with the same period last year. The company's current borrowing decreased, interest expenses decreased accordingly, and financial expenses decreased by 24.46 million yuan compared with the same period last year, resulting in a 1.77% decrease in the rate of expenses during the period compared with the same period last year. The company's expenses are well controlled and its profitability has been improved.

Directional additional issuance, the introduction of Juhua Group. The company announced a non-public offering plan in January this year, which intends to issue no more than 63.16 million shares to Juhua Group and raise no more than 1.2 billion yuan to acquire 100% equity in Jutai and Qingtai, a subsidiary of Juhua Group, and to build a waste incineration BOT project (1200t/d). After the completion of this acquisition, the company's business scope will be expanded from the atmosphere to sewage and solid waste treatment, achieving full coverage of the three major areas of environmental protection. The actual control of Juhua Group is Zhejiang SASAC, and the successful introduction of Juhua Group will further enhance the background of the company's shareholders. At present, the net interest rate of atmospheric environmental protection equipment of the company is only 2%. If the sewage and solid waste treatment business is introduced in the form of BOT in the later stage, the profitability of the company will be greatly improved, and the acquisition of funds and projects is expected to be fully supported by major shareholders.

Profit forecast and investment rating. Regardless of the IPO plan, the company's earnings per share from 2014 to 2016 are expected to be 0.31,0.38 and 0.46 yuan respectively. Based on the latest closing price of 20.46 yuan, the corresponding dynamic price-to-earnings ratios are 65 times, 53 times and 44 times respectively. If the company's non-public offering is approved, the company's business structure and profitability will be fundamentally changed, and the company's "overweight" investment rating will be maintained for the time being.

Risk hint: the demand for the transformation of dedusting equipment is released slowly, and the additional plan has not been approved by the CSRC.