Under the double-carbon background, the heating industry welcomes the new reform, and the intelligent heating market has a broad space. 1) demand side:
"heating gap + policy-driven" to clarify the specific transformation needs downstream. From the perspective of the gap between supply and demand, there is an increase of about 590 million square meters of central heating area in China every year, but the approval control of thermoelectric projects is strict, and the growth rate of heat sources lags behind the heating demand, so there is an urgent need to improve heating efficiency. From the policy point of view, in June 2022, the State Council issued the implementation Plan for Aging, Renewal and renovation of Urban Gas Pipelines (2022-2025), with heating pipelines and equipment as one of the key transformation priorities; in December 2017, the "Winter Clean heating Plan for the Northern region" issued by ten ministries and commissions makes it clear that 22,000 intelligent thermal stations will be built and 14,000 will be renovated in the northern region. 2) supply side: the financial benefit of energy-saving transformation is obvious, which can help thermal companies to reduce cost and increase efficiency.
According to the project data disclosed by Ruina Intelligent, after the application of intelligent heating solutions in the heating energy-saving operation business of the company from 2017 to 2021, the average energy-saving cost of each project reached 10%, 20%, helping thermal companies to reduce costs and increase efficiency. We estimate that the total market space for the transformation of heating stock in China before 2022 is 268.753 billion yuan, and the new heating area from 2022 to 2025 is expected to bring an incremental market of 22.712 billion yuan, 25.491 billion yuan, 28.521 billion yuan and 212.16 billion yuan, respectively.
"Software and hardware self-research + integrated service", cost and technology leading both. The main results are as follows: 1) the heating transformation scheme covers the whole link, and the integrated service solves the downstream pain point. The company has rich technology accumulation, and its business covers the whole scene of heating station, pipe network transportation and user terminal heating. It is one of the few companies with independent core hardware and software, which can provide integrated service solutions from equipment installation to daily operation. Solve the pain points that downstream thermal companies need to assemble software and hardware from different manufacturers and daily operation difficulties; 2) self-research of core products. We believe that with the high performance-to-price ratio of the integrated solution, Ruina Intelligence is expected to continue to occupy market share and bring rapid growth in the company's performance.
"customer recognition + capacity expansion + continuous R & D" is promoted in many ways, and the strong team of the heating industry is ready to start. After the listing and financing, the company further strengthens the barriers, and the future growth has multi-dimensional driving forces: 1) customer expansion: with some benchmarking cases, Ruina Intelligence has gradually formed a good customer reputation in the thermal company, and the business continues to expand to the whole country. At the same time, there are abundant orders on hand, laying a good foundation for performance growth next year; 2) capacity expansion: the construction project of intelligent heating equipment production base is expected to reach production in five years. After reaching production, it will form an annual production capacity of 600 sets of intelligent modular heat exchanger units and 20,000 sets of intelligent hydraulic balancing devices, which provides a favorable guarantee for improving product supply capacity and consolidating the company's competitive advantage in the market. 3) technological innovation: the company maintains high R & D investment and takes the lead in exploring the application of AI algorithm, and has won the bid for the first section of AI intelligent heating project in the central district of Zaozhuang City Thermal Power Corporation, and good customer feedback has been put into trial, and AI technology is expected to further consolidate technical barriers.
Investment advice: in the short term, we believe that the company has plenty of orders on hand, and its performance is expected to grow steadily during the year.
In the long run, the intelligent heating market is still in the early stage and has a broad space. Ruina Intelligence is expected to continue to increase its market share and achieve performance growth by virtue of its first-mover advantage and excellent technology. We estimate that the company's net return profit from 2023 to 2025 will be RMB 239pm, an increase of 19.14%, 34.01% and 29.78% over the same period last year, and the latest closing price corresponds to PE of 20.97Compact 15.65max 12.06. Give a rating of "overweight".
Risk tips: lower-than-expected delivery, inventory impairment risk, business seasonal fluctuation risk.