We maintain our “buy” and original target price of HK$10.95. We have slightly lowered CIMC Enrico's (“Company”) shareholder net profit forecast for 2023-2025 to RMB 1,228 billion (-6.0%) /RMB 1,488 million (-1.6%) /RMB 1,761 million (-0.1%), respectively. We forecast the company's earnings per share for 2023/2024/2025 to be RMB 0.605, RMB 0.738, and RMB 0.867, respectively. Our target price corresponds to 15.9 times/13.1 times/11.1 times the 2023-2025 price-earnings ratio and 2.0 times the 2023 net market margin.
The company's revenue grew rapidly in the first half of 2023. The company's revenue for the first half of 2023 was RMB 10.76 billion, an increase of 20.2% over the previous year. The company's gross margin rose 0.6 percentage points to 16.5%. The company's net profit has grown rapidly. The company's net profit for the first half of 2023 reached RMB 568 million, an increase of 29.3% over the previous year, which was better than our expectations. In a complex macro-environment, the company has achieved steady growth. We believe the company will maintain its positive performance in the second half of 2023.
Domestic and foreign market demand drives the company's clean energy business growth. In the first half of 2023, the company's clean energy business achieved revenue of RMB 6.29 billion, an increase of 34.4% over the previous year. With China's economic recovery and natural gas prices falling, demand for LNG in the Chinese market has clearly recovered, driving the company's sales of storage and transportation equipment such as LNG storage tanks and CNG trailers. Additionally, due to the green upgrade of the global shipping industry and the booming prospects of the shipbuilding industry, the company received 8 new overseas shipbuilding orders in the first half of 2023. We believe that with the recovery in demand for clean energy in the Chinese market and strong demand in overseas markets, the company's clean energy business will achieve significant growth.
The company continues to implement long-term plans for the hydrogen energy industry, and the hydrogen energy business continues to grow rapidly. In the first half of 2023, the company's hydrogen energy business achieved revenue of RMB 270 million, an increase of 59.1% over the previous year. The company's revenue target for hydrogen energy business in 2023 is RMB 700 million. The strength of the company's storage and transportation equipment will help the company participate in the upstream and downstream links of the hydrogen energy industry chain and continue to maintain the rapid development of its hydrogen energy business.
Catalysts: Changes in the overseas energy landscape bring development opportunities; hydrogen energy business development potential is huge; LNG prices are falling.
Risk factors: Demand for clean energy falls short of expectations; rising raw material prices.