The company released three quarterly reports for 23 years, and the results were in line with expectations. The company's downstream thermal power DCS independent controllable demand release, the company is in the first echelon of the industry, in-hand orders continue to grow. During the reporting period, the company's profitability continued to improve, the operating inflection point was established after the divestiture of biomass power generation business, and the "highly recommended" investment rating was maintained.

The company released three quarterly reports for 23 years, and the results were in line with expectations. From January to September, the company achieved revenue of 1.001 billion yuan, an increase of 11.18% over the same period last year; the net profit of the parent company was 90 million yuan, an increase of 45.14% over the same period last year; and the net profit after deducting 77 million yuan, an increase of 94.90% over the same period last year. In the third quarter, the company's revenue was 308 million yuan, down 8.74% from the same period last year; the net profit of the parent company was 47 million yuan, up 33.76% from the same period last year; and the net profit after deducting 42 million yuan was 41.95% over the same period last year. From January to September, the company's net operating cash was 25 million yuan, an increase of 265.79% over the same period last year, mainly due to the decrease in the amount of goods paid by the company during the reporting period.

The profitability continues to improve, and the management inflection point is established. During the reporting period, the company strengthened the construction of talent echelon and further improved human efficiency. From January to September, the company's overall gross profit margin was 37.14%, an increase of 3.50 percentage points over the same period last year; and the net profit rate was 9.04%, an increase of 2.11 percentage points over the same period last year. From January to September, the company's sales, management and R & D expenditure rates were 13.74%, 6.04% and 9.77% respectively, with year-on-year changes of-0.09%, 0.35% and 0.80% respectively, which remained relatively stable. In the fourth quarter of last year, the company spun off the loss-making biomass power generation business, and we believe that the company's operating inflection point has been established at the current time. According to the disclosure of the company's report, the company's on-hand orders continue to grow compared with the same period last year. The industry-wide coverage in the process industry has been further enhanced, and we expect the company's annual profit growth trend to be maintained.

Thermal power DCS independent controllable demand release. At present, there are more than 1500 large-scale thermal power stations in service in China, and the market demand for independent control of thermal power DCS is more than 15 billion yuan. The company took the lead in launching the NT6000 V5 intelligent control system in the country in 2020, which is the first domestic DCS system certified by the national authority. We believe that the company is in the first echelon of domestic thermal power DCS. During the reporting period, the company continues to achieve new breakthroughs in the localization of millions of coal-fired units DCS, and is expected to share the dividends of this round of thermal power construction cycle.

Maintain the "highly recommended" investment rating. It is estimated that the company's revenue from 2023 to 2025 will be 16.74,22.28 and 2.896 billion yuan respectively, and its net profit will be 1.67,2.60 and 333 million yuan respectively, corresponding to 25.8,16.6,12.9 times of PE respectively, maintaining a "highly recommended" investment rating.

Risk hint: the scale of thermal power construction is lower than expected and the competition in the industry intensifies.