The company announced that 23H1 revenue was 110 million yuan, yoy +14.1%, net profit attributable to the mother was 0.02 billion yuan, yoy -88.2%, net profit after non-attributable net profit - 560,000 yuan, yoy +76%; corresponding to q2 revenue of 0.8 million yuan, yoy +17.6%, QoQ +126.5%, net profit to the mother - 05 billion yuan, yoy -153.9%, QoQ -171.4%, net profit not attributable to income - 02 billion yuan, net profit growth on the revenue side was significant. The company has strong seasonal business attributes. Project revenue confirmation is mainly concentrated in the fourth quarter. It is expected that September will enter the centralized bidding stage and lead to order release.
Looking at the revenue side, the main business is intelligent modular heat exchanger unit/intelligent IoT balance valve/ultrasonic heat meter/heating energy saving system project revenue of 1528/1369/821/39.82 million yuan, YOY -59.5%/+486.5%/-49.7%/+83.9%, balance valve and system engineering, respectively. Looking at the profit side, 23H1's gross profit margin is 52%, yoy+2.1pct. It is expected to be mainly driven by system engineering where gross margin has increased significantly. The sales/management/R&D/finance expense ratios are yoy-1.4/+4.3/+6.3/+0.4 pct, respectively. Management and R&D expenses are mainly due to increases in other expenses such as wages and remuneration paid by employees. Operating cash flow was 190 million yuan, yoy +25.6%, and cash flow improved significantly.
Competitive advantages: 1. Build the foundation of technology, empower AI, and create comprehensive advantages of integrated software and hardware services. Since its establishment, the company has been technology-oriented. It has a number of independently developed core technologies in software and hardware products. Rena's overall low-carbon solution can effectively reduce heat consumption and carbon emissions by 10% to 30%, and electricity consumption by 30% to 50%. At the same time, excellent independent research and development capabilities combined with massive project data accumulation have created Rena's advanced AI technology advantages. At the software level, the company currently has 8 categories and more than 50 independent research and development models. The company has cooperated with VITO of the Belgian Flanders Institute of Technology to launch the STORM AI intelligent controller, which can support various communication methods, satisfy access to cloud services and terminal devices, and achieve intelligent heating. On the hardware side, the company covers the monitoring and management of the entire heating system, from heat sources, pipe networks, heat stations to heat users, such as ultrasonic heat meters, intelligent electric control valves, intelligent metering balance valves, and intelligent modular heat exchange units, etc., and has launched “high-efficiency intelligent maglev heat pump units” developed independently for medium to large centralized heating scenarios and “efficient intelligent modular heat pump units” for small and medium-sized centralized heating scenarios to achieve multi-energy complementarity. 2. After years of hard work to build brand power, scarce soft power helps to quickly develop new markets. The company has now covered 100+ cities in 12 provinces and 200+ thermal enterprise customers. With years of deep cultivation in Shandong Province to establish brand influence, the company has successively achieved business breakthroughs in opening up markets outside of the province. It is expected that in the future, with strong market brand effects, it will quickly replicate and promote new markets.
Investment suggestions: We believe that Rena's one-stop low-carbon smart heating solution based on autonomous technologies such as automation (OT) +information technology (IT) +intelligence (AI) has upgraded the heating operation process from traditional “human-driven” to “data-driven”, realized the transition from “extensive” to “refined” heating, and comprehensively built a new smart heating system in China. Considering that the overall pace of tenders for this year was slow or delivery was tight, the adjusted 23-25 revenue forecast was 8.5/11.5/15.8 (previous value: 924/13.06/1,788 billion yuan), the return net profit forecast was 2.6/3.5/4.7 (previous value of 2.8/39/5.3 billion yuan), and the corresponding PE was 14.5/10.8/8.0x, maintaining the “buy” rating.
Risk warning: industrial policy/large accounts receivable/macroeconomic fluctuation/market competition risk.