Core views

The company released its 2023 semi-annual report. During the reporting period, it achieved total operating revenue of 29.915 billion yuan, an increase of 7.19% over the same period last year; net profit attributable to shareholders of listed companies was 2,002 billion yuan, an increase of 12.85% over the previous year. In the first half of 2023, the company achieved new orders of 48.857 billion yuan, an increase of 33.29% over the previous year. In the Q2 single quarter, the company achieved new orders of 26.2 billion yuan, an increase of 40% over the previous year, and the order growth rate in a single quarter reached a new high since the second half of 2020. Judging from the revenue growth rate of various businesses, general engineering contracting & trading business revenue growth rates were the highest, at 21% and 39%, respectively.

occurrences

The company released the 2023 semi-annual report. During the reporting period, the company achieved total operating income of 29.915 billion yuan, an increase of 7.19% over the same period of the previous year; net profit attributable to shareholders of listed companies was 2,002 billion yuan, an increase of 12.85% over the previous year; in the second quarter, the company achieved operating income of 15.198 billion yuan, an increase of 10.12% over the previous year, and achieved net profit of 983 million yuan, an increase of 15.93% over the previous year.

Brief review

Performance was in line with expectations, and net profit growth was higher than revenue growth

In the first half of 2023, the company achieved total operating revenue of 29.915 billion yuan, an increase of 7.19% over the same period last year. Net profit attributable to shareholders of listed companies was 2,002 billion yuan, an increase of 12.85% over the previous year. Net profit growth rate was faster than revenue growth rate, and the advantages of scale continued to be reflected. It is expected that the scale effect will continue in 2023-2025, and the company's profit will be more flexible.

Revenue from trade, general engineering contracting, thermal power, and gas engines is growing fast

Judging from the revenue growth rate of various businesses, the revenue growth rate of general engineering contracting & trading business was the highest, at 21% and 39% respectively; followed by thermal power and combustion engines, with revenue growth rates of 18.5% and 14%, respectively. Benefiting from the shortage of electricity in 2022, the company's combustion engine orders grew high, and demand for thermal power in the industry increased. In terms of other businesses, wind power revenue fell 19% year on year, and hydropower fell 15% year on year.

Furthermore, revenue from power plants, financial services, and emerging growth businesses was basically the same year on year.

Q2 The growth rate of new orders reached a record high in recent years. Orders for clean and efficient equipment in the first half of the year were close to the whole of last year

In the first half of 2023, the company achieved new orders of 48.857 billion yuan, an increase of 33.29% over the previous year. In the Q2 single quarter, the company achieved new orders of 26.2 billion yuan, an increase of 40% over the previous year, and the order growth rate in a single quarter reached a new high since the second half of 2020.

In 2020-2022, the company's order growth rates were 22.93%, 14.15%, and 16.29%, respectively. The order growth rate in the first half of the year was much higher than in previous years, and the performance was impressive.

By business, in the first half of the year, new orders for clean and efficient energy equipment (thermal power, nuclear power, gas engines) were added 21 billion yuan, up 73% year on year. It is close to the whole of last year. The increase is expected to come mainly from thermal power. In 2022, the number of tenders for thermal power has increased dramatically, but due to the late opening of tenders, 2023Q2 orders came into effect in large numbers; new orders for renewable energy equipment (wind power, hydropower) were 116 billion yuan, an increase of 26% over the previous year; in terms of new orders, engineering and trade was 5.7 billion yuan; the modern manufacturing service industry was 6.1 billion yuan; and the emerging growth industry was 6.1 billion yuan.

In the first half of 2023, the company achieved breakthroughs in new products and fields. Hydropower obtained a contract to develop an impact hydroelectric power unit with the largest stand-alone capacity of 500 megawatts in the world. It achieved market breakthroughs in the field of pumped storage in variable speed, driving steam turbines in the field of air separation, and hydrogen energy in the fields of heavy trucks and construction vehicles.

Profit forecast and valuation: We expect the company's operating income for 2023, 2024, and 2025 to be 65.953 billion yuan, 79.473 billion yuan, and 88.160 billion yuan, respectively, and net profit of 37.53 billion, 5.04 billion yuan, and 6.024 billion yuan respectively, corresponding PE to 13.92, 10.04, and 8.67X, respectively.

Risk warning

The completed amount of power infrastructure investment fell short of expectations: the company is mainly engaged in power equipment, and its performance is highly correlated with the investment amount of wind power, gas power, thermal power, hydropower, and nuclear power. If the completed amount of power investment falls short of expectations, it will affect the company's performance; prices of upstream raw materials fluctuate greatly: price fluctuations such as upstream steel will affect the company's performance; downstream electricity demand falls short of expectations: power investment is related to electricity demand. If demand for electricity is weak, it will affect investment in new power supplies, which in turn affects the company's performance;

Production expansion is falling short of expectations: Some of the company's current production capacity is still insufficient. If production expansion falls short of expectations, it will affect the company's foreign sales volume; there is a risk of macroeconomic fluctuations.