Actively open up new markets and sign full orders: the company issued the "announcement of main operating data from January to August 2023" on September 27th. From January to August this year, the company obtained a total of 2.999 billion yuan (including tax) in new orders, an increase of about 24% over the same period last year, of which 2023H1 achieved a total of about 2.6 billion yuan (including tax) and signed 6 sets of large-scale air separation units of more than 30, 000 grades, including 2 sets of 60, 000 super-large air separation units. The company won the bid for 40,000 grade air separation equipment in the domestic petrochemical industry, opening up a new situation in the field of domestic petrochemical large-scale air separation equipment. The company continues to plough the field of cryogenic technology and has made breakthroughs in LNG cold energy projects such as liquid air separation unit, carbon dioxide capture and comprehensive utilization (CCUS) cold box, large natural gas light hydrocarbon separation cold box and liquid oxygen storage tank to extract rare gas.

Steady progress in production capacity construction: the overall production capacity of the beneficiary company is climbing. From January to August 2023, the company achieved a total output value of 1.68 billion yuan, an increase of about 45% over the same period last year. The fund-raising project "Intelligent Manufacturing Project of 15 sets of large Cryogenic equipment per year" has been put into trial production in January 2023, and 2023H1 has achieved economic benefits of 19 million yuan, effectively alleviating the bottleneck of the company's production capacity. In May this year, through the establishment of Jiaxing Fosda, a wholly-owned grandcompany, the company invested in the construction project of green intelligent manufacturing of 10 sets of large-scale modular cryogenic chemical equipment, which is now in smooth progress. After the project is completed, it will help to solve the waterway transportation problems of large-scale air separation equipment, modular LNG device, large-scale winding heat exchanger, large-scale chemical cold box and large vacuum storage tank.

The proportion of overseas market revenue has increased, and the profit side has been greatly optimized: the company achieved a total revenue of 948 million yuan in the first half of this year, an increase of 20.50% over the same period last year, 95 million yuan in net profit, an increase of 70.42% over the same period last year, and 90 million yuan in net profit deducted from non-return, an increase of 78.74% over the same period last year. The weighted average return on equity was 7.81%, a decrease of 2.96pct compared with the same period last year. From a quarterly point of view, the company's 2023 Q1 and Q2 realized revenue of 340 million yuan (+ 13.56%, the same below) and 608 million yuan (+ 24.76%) respectively, and the company's 2023 Q1 and Q2 realized net profit of 35 million yuan (+ 46.50%) and 60 million yuan (+ 88.56%), respectively. In the first half of the year, the company's comprehensive gross profit margin was 24.02%, a substantial increase in 7.42pct compared with the same period last year, mainly due to a substantial increase in overseas revenue, an increase in the proportion of revenue, and a higher average gross profit margin for overseas projects. From a regional point of view, 2023H1's domestic sales achieved revenue of 577 million yuan, down 17.49% from the same period last year, accounting for 60.92% of the total revenue, down 28.49 pct from the same period last year; export revenue reached 370 million yuan, an increase of 346.92% over the same period last year, accounting for 39.08% of total revenue, an increase of 28.49pct over the same period last year.

Investment suggestion: the company has been committed to the field of cryogenic technology for a long time, and has accumulated many sets of super large air separation equipment and LNG units at home and abroad through years of practice, and has accumulated a good reputation in the market, and the product technology and quality are more advanced. With the further deepening of the company's domestic and overseas dual market strategy, the company's performance is expected to continue to improve. We expect the company to achieve a net profit of 2.52 million yuan from 2023 to 2025. Corresponding to the closing price on September 28, 2023, PE is 17.3 shock 10.2 shock 7.9, covering for the first time and giving "overweight" rating.

Risk tips: production capacity construction progress is not as expected; downstream demand is not as expected; exchange rate fluctuation risk.