Events:

The company released its mid-2023 report. 2023H1 achieved an operating income of 54.57 billion yuan, an increase of 3.36% over the same period last year, and a net profit of 890 million yuan, an increase of 7.27% over the same period last year.

Comments:

Production and operation are stable. The company's 2023Q1/Q2 realized operating income of 28.93 billion yuan / 25.64 billion yuan and net profit of 510 million yuan / 390 million yuan respectively. 2023H1 achieved a gross profit margin of 9.64%, an increase of 1.35pct over the same period last year.

China's nuclear power industry is expected to usher in rapid development. At present, China's annual nuclear power generation accounts for about 5% of the total electricity generation, which is still double the global average and is expected to rise to 10% by 2035. The approved number of nuclear power units in China reached a record 10 in 2022, and the annual approval of new nuclear power units in the next five years is expected to reach the level of 680 units. In April 2023, the National Energy and the 2023 Energy work guidance pointed out that "actively promote the construction of nuclear power and hydropower projects" and clearly "promote the approval and construction of coastal nuclear power projects in an orderly manner on the premise of ensuring safety". Nuclear power ushered in a positive historical opportunity. On July 31, 2023, the National standing Committee approved six new nuclear power units with a total investment of about 120 billion yuan.

The company's nuclear power engineering business is expected to continue to grow. The company is the only leading company in the world engaged in nuclear power construction continuously for 38 years, representing the highest level of nuclear power construction in China. Mastering various reactor types and specifications of nuclear power construction capabilities will significantly benefit the accelerated development of the industry.

2023H1, the company's nuclear power engineering business achieved revenue of 11.583 billion yuan, an increase of 37.89% over the same period last year. Nuclear power engineering business revenue accounted for 21.50% of the company's revenue, significantly higher than the mid-2022 report and annual report.

There are bright spots in industrial and civil engineering business to seize the opportunity of green and low carbon. The company focuses on developing the field of industrial and civil engineering construction, covering housing construction, municipal administration, water conservancy and hydropower, etc. 2023H1 realized plate business revenue of 42.99 billion yuan, of which 34 new energy projects were signed with a total amount of 6.842 billion yuan, an increase of 45.8% over the same period last year, including the photovoltaic zone E section project of Zhongwei 3GW photovoltaic composite project in the new energy base of "Ningxiang DC".

Maintain a "buy" rating. It is estimated that the net profit of homing from 2023 to 2025 is 21.0 × 25.2 / 2.89 billion yuan, the corresponding EPS is 0.70max / 0.83, and the corresponding PE is 10.62 / 8.86max 7.72 times.

Risk tips: nuclear power investment is not as expected, payback risk, company performance is not as expected