In 3Q23, Enric's turnover grew 12% YoY as the strong growth at clean energy segment was partly offset by declines at two other segments. The value of new orders jumped 53% YoY over the same period on the impressive growth at clean energy segment. We expect the company's turnover to grow 15% QoQ in 4Q23 as the conclusion of a few projects should lead to strong turnover for liquid food segment. We trim our 2023-25 earnings forecasts by 1-6% mainly to reflect the weak earnings of the chemicals segment and the dilution from its recent spin-off. We reiterate our BUY call with target price reduced to HK$8.64.
Key Factors for Rating
Enric's turnover grew 12% YoY to RMB5.88bn in 3Q23. The decent growth was mainly driven by the 33% YoY growth at the clean energy segment. This was partly offset by the declines at the other two segments. For 9M23, the company's turnover grew 17% YoY to RMB16.6bn.
More importantly, the value of the company's new orders surged 53% YoY to RMB7.1bn in 3Q23. This was mainly driven by the impressive 88% YoY growth at the clean energy segment and the 69% YoY growth at the liquid food segment. In particular, the company secured new order of about RMB400m for LNG cylinders for trucks in August and September, up more than 80x YoY.
For 9M23, the value of new orders grew 28% YoY to RMB19.8bn. The order backlog by the end of 9M23 also grew 28% YoY to a record high of RMB22.2bn.
In particular, the sales of hydrogen energy products surged 63% YoY to RMB436m in 9M23. The value of new orders of hydrogen products surged 34% YoY to RMB582m over the same period. We believe the company can meet its target sales of RMB700m for such products for the full-year.
Despite the cuts in our earnings forecasts, we still expect the company to post decent growth in the next two years given the strong order backlog of its clean energy segment.
Key Risks for Rating
Further sharp fall in earnings of its chemicals segment.
Lack of margin improvement for the clean energy segment.
Valuation
We lower our target price from HK$10.04 to HK$8.64 mainly to reflect the cuts in our earnings forecasts. Our target valuation remains at 1.1x PEG of the next two years with EPS CAGR now at 12.4% (down from 14.1% previously).