Incident: The company released its 2022 annual report. It achieved operating income of 117.623 billion yuan in 2022, a year-on-year decrease of 10.48%, and achieved net profit of 3,5566 billion yuan to the mother. The loss margin was narrower than in 2021.
The company lost money due to many factors. The company maintained losses in 2022. The main reasons were: 1) production and operation related costs of some of the company's domestic production and management enterprises and participating enterprises (especially in the Yangtze River Delta region) increased under the influence of the epidemic; 2) some of the company's overseas engineering businesses were affected by various factors such as the international situation and the Russian-Ukrainian conflict, which led to a sharp increase in construction costs; 3) the value of financial assets held by the company, measured by fair value, fluctuated in the value of financial assets held by the company (Hong Kong-listed Shangtang-W and Sportage shares were under pressure in 2022).
Revenue from businesses in all sectors has declined, and the scale of integrated services sector business has shrunk further. In 2022, the company's energy equipment sector achieved operating revenue of 56.093 billion yuan, a year-on-year decrease of 4.52%, mainly due to the reduction in wind power equipment revenue after the wind power rush; gross margin increased slightly by 0.18 pcts to 18.05%.
The industrial equipment sector achieved operating income of 40,533 billion yuan, a year-on-year decrease of 4.04%, mainly due to a year-on-year decline in elevator business revenue; gross margin fell slightly by 0.78 pct to 15.58%. The integrated services sector achieved revenue of 26.708 billion yuan, a year-on-year decrease of 31.16%, mainly due to the decline in project revenue caused by the company's active strategic adjustments and business focus; gross margin increased by 2.33 pcts to 8.36% year-on-year, mainly due to changes in the project structure.
Continue to pay attention to the future development of the energy equipment sector (coal power, offshore wind power, energy storage, hydrogen energy). The company's new and on-hand orders for energy equipment remained high. New energy equipment orders in 2022 were 63.88 billion yuan (61.26 billion yuan in 2021), including 5.88 billion yuan for nuclear power equipment, 16.46 billion yuan for coal-fired power generation equipment, 10.87 billion yuan for energy storage equipment, and 17.70 billion yuan for wind power equipment, all of which grew except for nuclear power equipment orders. The company's on-hand energy orders of 155.44 billion yuan at the end of 2022 (143.25 billion yuan at the end of 2021) also increased.
In the field of coal power equipment, the company led the market share industry with the world's leading low electricity consumption (minimum coal consumption of 249.7 g/kWh) and the world's highest recorded coal power efficiency. It stabilized its leading position in the offshore wind power field and won the bid for the world's first floating offshore wind power and fishery farming integrated equipment research and demonstration project, opened up space for offshore business model development, and diversified layout of various energy storage technologies in the field of energy storage (electrochemical energy storage, lava energy storage, compressed air energy storage, liquid flow battery storage, etc.) to comprehensively build hydrogen energy in the field of hydrogen energy Manufacturing and storage add to the core competitiveness of the entire industry chain, There is plenty of room for development in all fields of energy equipment in the future.
Maintaining the “buy” rating: Based on the company's on-hand orders and the profitability of various businesses, we lowered the company's 23/24 profit forecast. The company's net profit for 23-25 is estimated to be 2,536/32.22/4,037 billion yuan (19% down/11% down/increase), corresponding to EPS 0.16/0.21/0.26 yuan. The current A-share price corresponds to 23-year PE 27 times, and the H-share price corresponds to 23-year PE 10 times. As a leading domestic manufacturer of energy equipment (coal power, offshore wind power, nuclear power), the company is expected to use its leading advantages to further increase its market share in the context of China's energy structure transformation and industrial restructuring. At the same time, with the support of the company's technological research and development advantages, the energy storage and hydrogen energy business is also expected to become a new performance growth point for the company, maintaining the “buy” rating of A/H shares.
Risk warning: Cost pressure due to rising raw material prices; overseas business risks due to geopolitical and other factors; risk of exchange rate fluctuations, etc.