Event Overview: On August 18, the company released its semi-annual report for 2023. In the first half of 2023, it achieved operating income of 300 million yuan, an increase of 14.22% over the previous year; net profit of 47 million yuan, an increase of 50.16% over the previous year; net profit of 42 million yuan after deducting non-return net profit of 42 million yuan, an increase of 61.60% over the previous year. In 2Q23, the company achieved operating income of 128 million yuan, a year-on-year decrease of 17.41%; net profit of 16.3991 million yuan, an increase of 23.25% over the previous year; net profit after deducting non-return net profit of 12.536,700 yuan, an increase of 26.96% year-on-year.

Diversified equipment application scenarios to create a pioneer in energy saving and carbon reduction: In the first half of 2023, the company completed the Laogang temporary sludge treatment service project, completed a total sludge treatment volume of about 1.24 million tons, achieved technical reserves for various special sludge treatment, and laid a solid foundation for future expansion of various sludge treatment projects to the national market.

Since 2022, integrated low temperature vacuum dehydration and drying technology has been applied to the dehydration and drying of gasified fine slag and the dehydration and drying of cathode materials. The high water source heat pump technology and equipment innovatively developed by the company has been used in environmental protection projects such as Daguan Water Purification Plant and Hongqiao Sewage Treatment Plant. It has remarkable energy saving and carbon reduction effects, and is expected to further achieve comprehensive utilization of heat energy in industrial fields with high temperature waste heat.

Deepening the layout of carbon assets and hydrogen storage and transportation business: The company's Jet Carbon Technology business covers carbon consulting, carbon asset development and trading. It has already participated deeply in the Lincao Carbon Sink Project in Ordos City and research on carbon peak topics in the local industrial sector, and is expected to benefit from the CCER restart in the future. On July 11, the company announced that Beijing Platinum plans to launch a new hydrogen energy business with Shanghai as the core, and proposed that “Beijing Platinum hydrogen energy related business and technology will be transferred to Shanghai Platinum.” The company is developing a full-chain “hydrogen production-hydrogen storage-cogeneration” pilot project for urban sewage plants. It uses biogas to efficiently produce hydrogen, store and apply hydrogen to improve the renewable energy utilization efficiency of urban sewage plants. It is expected to be deeply coupled with the company's sludge treatment, exhaust gas purification, and high-temperature water source heat pumps. In the future, the possibility of the company's further capital increase to achieve merger with hydrogen energy sources is not ruled out.

Plans to repurchase shares to boost market confidence: On August 17, the company announced that the chairman, Mr. Huang Wenjun, proposed that the company use part of the overraised capital to implement share repurchase through centralized bidding transactions. The repurchase price should not exceed 32 yuan/share (inclusive), and the total repurchase amount should not be less than 25 million yuan (inclusive), no more than 50 million yuan (inclusive), accounting for 0.77% to 1.53% of the total share capital. The share buyback is expected to boost market confidence and return the value of the company's stock price.

Investment suggestions: The company's integrated dehydration and drying equipment has broad application prospects, and applications in the industrial field are worth looking forward to; hydrogen energy business entities are expected to land in Shanghai, and the implementation of hydrogen storage projects will accelerate; it is expected to take advantage of the low-carbon “east wind” to speed up the carbon asset business layout. Based on the company's business conditions and maintaining the company's profit forecast, the EPS for 23/24/25 is expected to be 1.08/1.39/1.76 yuan/share, respectively, corresponding to 20.1/15.7/12.4 times the PE closing price on August 18, 2023, respectively. Considering that the company is speeding up the hydrogen storage and transportation and carbon asset business layout, increased synergy, and good performance growth, it is given 24.0 times PE in 2023, the target price is 25.92 yuan/share, and the “careful recommendation” rating is maintained.

Risk warning: industry policy risks; fluctuations in raw material prices; increased competition in the industry.