Performance has been steadily improving, and clean and efficient energy equipment has contributed mainly to growth
The company announced that in the first half of 2023, it achieved total revenue of 29.915 billion yuan, 7.19% of the same period last year. Net profit margin of 2,002 billion yuan, +12.85%, gross profit margin of 17.43%, net profit margin of 7.14%; including 02 revenue of 15.198 billion yuan, +10.12%, net profit margin of 983 million yuan, gross profit margin of 17.05%, and net profit ratio of 6.80%. The company's performance growth is due to the high demand for thermal power equipment and the increase in business revenue in the clean and efficient energy equipment sector.
Business orders in various sectors continued to grow, and orders for clean and efficient energy equipment increased significantly
In April 2023, the company added 48.857 billion yuan in orders, an increase of 33.29% over the previous year. Among the new orders in force, orders for clean and efficient energy equipment amounted to RMB 20.989 billion, accounting for 42.96%, renewable energy equipment orders of RMB 11.555 billion, accounting for 23.65%, and engineering and trade orders of RMB 5.716 billion, accounting for 11.70%. Modern manufacturing services orders amounted to 4,519 billion yuan, accounting for 9.25%, and orders for emerging growth industries amounted to 6.073 billion yuan, accounting for 12.43%. The clean and efficient energy equipment (thermal power, combustion engine, nuclear power) sector has benefited from the acceleration of approval of thermal power and nuclear power. As of mid-2023, orders are close to the level of the full year of 2022 (21,687 billion yuan), and the sharp increase in orders is conducive to safeguarding the company's future revenue.
Demand for electricity continues to rise, approval of thermal power projects is speeding up, and the company's business is expected to benefit
According to the China Telecommunication Union forecast, the electricity consumption of the entire national society will reach 9.15 trillion kilowatt-hours in 2023, an increase of about 6% over the previous year. The “Analysis of the Electricity Supply and Demand Situation in the Next Three Years” issued by the China Telecommunication Union suggests that electricity supply is tight, that coal power construction should be accelerated on the premise of ensuring safety, and that 140 million kilowatts of coal power should be put into operation on schedule over the next three years. Currently, China's thermal power (the vast majority is coal power, which accounts for about 50% of installed capacity and 70% of power generation, giving full play to the protective role of electric ballast stones and supporting peak load demand. According to Greenpeace data, China approved a total of 907.16 million kilowatts of coal power projects in 2022, and approved a total of 50.4 million kilowatts of coal power installed capacity in the first half of 2023, reaching 55.56% of the approved installed capacity for the full year of 2022.
In the first half of 2023, the company's clean and efficient energy equipment business revenue was 9,973 billion yuan, +16.86% year-on-year: of these, thermal power/combustion engine/nuclear power revenue was 73.4714.19/1,206 billion yuan, +18.526/ 14.04%/10.62% year-on-year; gross margin was 19.03%/11.88%/15.71% respectively. As one of the three giants in the thermal power equipment market, the company can mass-manufacture 1.35 million kilowatt ultra-supercritical thermal power units for advanced thermal power equipment. It is in a leading position in the industry in various aspects such as 1 million kilowatt air cooling units for thermal power products, large-scale circulating fluidized bed boilers, etc., and is actively carrying out flexible transformation of existing coal power units, and has strong competitiveness in the field of thermal power generation equipment.
Nuclear power approval started, the company's nuclear power equipment technology is advanced, and the market share is leading
According to the National Energy Administration's “14th Five-Year Plan” for the Modern Energy System, the operating capacity of nuclear power will reach about 70 million kilowatts by 2025.
According to data from the National Energy Administration, as of June 2023, there are 55 nuclear power units in operation in China, with an installed capacity of 56993.34 MW; the cumulative power generation capacity is 211,884 billion kilowatt-hours, accounting for 5.08% of the country's cumulative power generation. There is still plenty of room for the target nuclear power installations, and the nuclear power industry will continue to grow. Five nuclear power projects were approved in 2022, with a total of 10 nuclear power units, a record high since 2009; investment in nuclear power has also increased dramatically in the past three years, with an average growth rate of nearly 30%, and future expectations for nuclear power equipment are rising across the board. By the end of 2022, there were 23 nuclear power units under construction in China, with a total installed capacity of about 25.49 million kilowatts, ranking first in the world.
After nuclear power was restarted, coastal and next-generation technology became the focus. In 2023, three nuclear power projects were approved in Shidao Bay, Shandong, Ningde, Fujian, and Xudabao, Liaoning, with a total of 6 units. The company undertook a number of main equipment development tasks for the above three nuclear power projects, including 5 steam generators, 3 voltage regulators, and 12 main pumps, and other nuclear island main equipment, as well as all 6 steam turbine generator sets. The company's business covers the complete nuclear power industry chain, continues to promote fourth-generation nuclear power research and development technology, and is expected to benefit from growing demand for nuclear power in the future.
Actively develop the renewable energy equipment business and vigorously expand the application of hydrogen energy technology
In the first half of 2023, the company's renewable energy equipment business/emerging growth industry revenue was 69.27/4.506 billion yuan, -14.99%/+1.87% year-on-year; the gross margin of the hydropower wind power business was 19.91%/10.30%. In terms of renewable energy equipment business, the company obtained a contract for the development of the world's largest stand-alone capacity 500 MW impact hydropower unit; the company mastered two wind power technology routes, double feed and direct drive, and continued to promote the development of offshore wind power technology. The 126-meter longest wind turbine blade developed independently in the world was officially launched, suitable for 17- 18MW offshore wind turbine. In terms of hydrogen energy business, the company achieved market breakthroughs in the fields of heavy trucks and construction vehicles, and successfully completed the world's first offshore pilot test of in-situ direct electrolysis of seawater without desalination at sea for offshore wind power. With the rapid development of the hydrogen energy market and the continuous improvement of the company's technology, the business structure is expected to continue to be optimized.
Investment suggestions and profit forecasts: The traditional energy industry is in strong demand, the company's thermal power and nuclear power equipment technology is leading, and the market share is high; renewable energy equipment has strong competitiveness; the hydrogen energy industry has broad development prospects; the company develops emerging industries such as hydrogen energy to create new performance growth points; the company is expected to return net profit of 3.890 billion to 5.140 billion/5.140 billion/6.183 billion yuan from 2023 to 2025, maintaining a “buy” rating.
Risk warning: The global economy is sluggish, demand for new energy is declining; the competitive pattern within the photovoltaic industry has worsened; raw material prices have fluctuated greatly; new technology has replaced silicon products; the company's production capacity investment falls short of expectations; trade barriers between Europe and the US have blocked industry development.