2023H1 natural gas market recovery led to the company's clean energy sector revenue growth rate of rapid growth. The company continued to invest in hydrogen energy business, a number of projects landed and realized sales revenue, driving the rapid growth of business revenue and orders. The fundamentals of the chemical environment plate are good, and the business is advancing steadily. Liquid food plate demand is strong, the growth level is good. Considering the broad growth space and good fundamentals of the company, the company is given a valuation of 6 times PB in 2023, corresponding to the target price of 29 yuan and a discount corresponding to the target price of HK $11 to maintain "buy".

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Profits increased by nearly 30%, and the performance in the first half of the year exceeded expectations. In the first half of the year, the company's operating income / profit attributable to shareholders was 10.757 million yuan respectively (compared with the same period last year), and the basic income per share was 0.283 yuan.

The company's gross profit margin is 16.5% (year-on-year + 0.60pct), newly signed order is 12.666 billion yuan (year-on-year + 17.87%), and on-hand order is 20.602 billion yuan (year-on-year + 18.77%) at the end of the first half of the year. Benefiting from the continuous recovery of the natural gas market, the stable release of chemical tank demand and the continuous expansion of liquid food projects, the company's performance exceeded expectations.

Clean energy sector: the recovery of natural gas market leads to the growth of supply and demand. The operating income of the clean energy sector in the first half of the year was 6.294 billion yuan, + 34.38% compared with the same period last year. The newly signed orders / final orders-on-hand are RMB 79.12 billion, respectively, and + 47.64% and 39.34% respectively over the same period last year, mainly due to the decline in domestic natural gas prices during the reporting period, driving the apparent consumption of natural gas + 6.7% and the import volume + 5.4% over the same period last year. This has led to the rapid growth of the company's upstream marginal gas treatment sales business, mid-stream natural gas storage and transportation equipment, and gas storage and peak shaving projects. The natural gas carrier business has been booming since 2023, with the company signing orders for 8 new LNG ships and 4 alternative ships in the first half of the year. According to the company's official Wechat account, August 21, when the alternative order takes effect, the company received two additional orders for 40000m3 medium-sized LPG/ liquid ammonia carriers, with an additional order amount of 900 million yuan. At the same time, the domestic natural gas heavy truck market picked up rapidly, with sales rising 273.6% in the first half of the year compared with the same period last year, and the company's newly signed orders for LNG bottles on vehicles increased nearly 20 times year-on-year. The above factors strongly drive the growth of revenue and orders in the clean energy sector. In the first half of the year, the company's gross profit margin in this sector was 12.20% (year-on-year + 0.50pct), mainly affected by economies of scale, reduced steel prices and increasing overseas orders denominated in dollars due to the appreciation of the US dollar.

Hydrogen business: revenue and orders maintain a high growth rate, and the whole industry chain blossoms at many points. In the first half of the year, the operating income of hydrogen energy business under the clean energy sector was 270 million yuan, + 59.12% compared with the same period last year. The newly signed order / final on-hand order is 345 million yuan respectively, which is 116.86% of the same period as the same period last year. The layout of the whole industrial chain of the company blossoms at many points.

In terms of research and development, the first 1200Nm3/h alkaline electrolyzer in the upstream hydrogen production link, the first 40-foot liquid hydrogen tank in the country in the middle reaches of the storage and transportation link, and the downstream application link Ⅳ vehicle bottle and hydrogen supply system are successfully delivered to export hydrogen energy heavy trucks and hydrogen smart tracks. In terms of sales, the company's 30MPa tube bundle containers, 99MPa station hydrogen storage bottles 390L Ⅲ vehicle hydrogen storage bottles to achieve batch sales, in July 2023, the company won the bid for Inner Mongolia's first large spherical tank hydrogen storage EPC package project and a number of hydrogen station projects. In the future, with the promotion of hydrogen energy support policies in various places, the company's hydrogen energy business is expected to contribute a strong growth point.

Chemical environment and liquid food business: steady growth at a high base. In the first half of the year, the operating income of the chemical environment sector was 2.472 billion yuan,-4.54% compared with the same period last year. The newly signed orders / on-hand orders at the end of the period are 2.309 billion yuan respectively, compared with the same period last year, which is-8.59% and 19.14% respectively, mainly due to the gradual reduction of the global impact of the epidemic, the return to balance of supply and demand configuration of chemical tanks, and the reduction of the order increment of standard tanks. The demand for special cans is still high due to the promotion of new energy and chip industry. During the reporting period, the company upgraded its production line to accelerate the digestion of special pot orders, with a gross profit margin of 22.70% (year-on-year + 2.00pcts). The products are mainly priced in US dollars and are affected by the appreciation of the US dollar. The operating revenue of the liquid food sector was 2.012 billion yuan, which was + 17.33% compared with the same period last year. The newly signed orders / final orders-on-hand were RMB 2.445 billion, respectively, which were-14.54% and 0.82% respectively compared with the same period last year. The revenue increased steadily, and the decline in newly signed orders was mainly due to the high base of orders for 665 million yuan of spirits projects in Mexico last year, and the follow-up will continue to implement the newly signed projects. The gross profit margin of this sector is 22.20% (year-on-year + 1.90pcts), which is mainly due to cost control and the expansion of alcohol bubble water equipment business with high gross margin.

Risk factors: the demand for natural gas is lower than expected; the promotion of hydrogen-related products is not as expected; the cost of raw materials has risen sharply; technical iterations have taken place in the company's industry; the risk of fluctuations in the US dollar exchange rate; market competition has intensified the risk.

Earnings forecast, valuation and rating: the fundamentals of the company's business are good, the market space of the industry is expanding, the traditional clean energy sector is performing well, and the emerging hydrogen energy business is poised to start. We expect the company's profit to continue to improve from 2023 to 2025, maintaining the company's annual EPS forecast of 0.64Unix 0.75Unix 0.95 yuan in 2023-24-25, and the current price is 7.34yuan, corresponding to the PE 10.3 pound 8.8max 7.0x. Beijing shares and Houpu shares are selected as comparable companies (the current average value of Ppuma B is 6 times), and the company's net assets per share is 4.84 yuan. Considering that the historical discount of the average valuation of the company and comparable companies is 63% (including exchange rate factors), according to this discount, CIMC Enrico currently has a reasonable target price of HK $11, maintaining the "buy" rating.