The company is a domestic cooling tower faucet. The market share will be further increased and profitability will increase. The company is a domestic cooling tower faucet with global competitiveness. It specializes in industrial and civil cooling towers, has mastered many core manufacturing technologies for environmentally friendly and energy-saving cooling towers, has core supply qualifications, and its customers cover many leading enterprises around the world. Benefiting from the improved competitive pattern, demand for cooling towers is rising in downstream thermal power, nuclear power, and emerging application fields such as semiconductors, energy storage, and data centers. The company's market share will further increase and profitability will continue to improve. We predict that in 2022-2024, the company will achieve operating income of 1,26/1,3083 billion yuan, net profit of 0.61/153/245 million yuan, EPS of 0.54/1.36/2.18 yuan, the current stock price corresponding to PE is 30.8/12.3/7.7 times, and the 2023-2024 valuation is lower than that of comparable companies. The company's cooling tower business has benefited from increased demand in thermal power, nuclear power and other fields, and has high growth potential. First coverage, giving a “buy rating”.
Cooling towers: Important equipment for temperature control, optimization of competition patterns, high downstream demand for thermal power, nuclear power, etc. Cooling towers are used to cool circulating water. Upgrading to high-value, energy-saving and environmentally friendly cold water towers is a product iterative trend in the industry, bringing demand for cooling tower inventory modifications. The increase in the industry mainly comes from (1) the acceleration of thermal power approvals and the doubling of demand in the cooling tower market. (2) China has stepped up the development of coastal nuclear power and inland nuclear power, decided to use high-level water collection cooling towers with high added value, and nuclear power cooling towers have entered a growth stage of 0→1. (3) Increased demand for cooling towers in emerging markets such as data centers, semiconductors, and energy storage. As overseas cooling tower giants gradually withdraw from the Chinese market, leading domestic companies will benefit even more from the increase in downstream demand, and profits will further increase.
Grasping the core technology of environmentally friendly and energy-saving cooling towers creates competitive barriers, opens up global market share, and further enhances the cooling tower industry has technology, qualifications and brand barriers. The company's competitive advantage is obvious. Technically, the company is one of the few domestic manufacturers that have mastered new technologies such as high-level water collection and fog removal to meet the needs of downstream customers for energy saving and environmental protection for cooling towers. In terms of supply qualifications, the company is a scarce qualified supplier to CNNC, benefiting from increased demand for nuclear power cooling towers. The company acquired Malaysia's Truwater Cooling Tower Company in 2013, leading the Southeast Asian market, and subsequently established subsidiaries around the world to expand its overseas presence. Currently, the company has long-term cooperation with giants such as Siemens, Saudi Basic Chemicals, TSMC, and domestic giants such as CNPC, Huadian Group, and Baosteel Group, and has established a global reputation. Benefiting from the optimization of the competitive pattern, domestic cooling towers have blossomed more downstream, demand for cooling towers in regions such as the Belt and Road has increased, and the company's global market share will further increase.
Risk warning: The size and progress of approved thermal power and nuclear power units are lower than expected, and exchange rates fluctuate.