Events:

The company publishes three quarterly reports for 2023. In the first three quarters of 2023, the company achieved a total operating income of 4.21 billion yuan, an increase of 10.7% over the same period last year, and a net profit of 200 million yuan, an increase of 13.2% over the same period last year.

Comments:

The newly signed order has fluctuated. In the first three quarters of 2022, the company signed 5.64 billion yuan in new orders, a decrease of 25.3% compared with the same period last year. Among them, the new orders signed by Q1/Q2/Q3 were 2.24 billion yuan, 1.85 billion yuan, respectively, which were-7.7%, 15.1%, 55.9%, respectively, compared with the same period last year. The slow pace of economic recovery led to a decrease in new orders signed in the third quarter compared with the same period last year. In terms of sub-structure, the newly signed orders for environmental protection / pulping and papermaking / civil construction / daily chemical / food fermentation engineering in the first three quarters were 7.8 and 14.4 million yuan, respectively, compared with the same period last year,-41.1% and 48.5 million yuan, respectively, compared with the same period last year. The newly signed order for new energy / municipal / pharmaceutical engineering is RMB 7.1 million, which is RMB 270 million, which is + 60.5%, 22.8% and 161.8% respectively compared with the same period last year. The traditional light industry is the main drag on the newly signed order.

The gross profit margin increased significantly compared with the same period last year, and some impairment losses were reversed. In the third quarter of 2023, the company achieved a total operating income of 1.5 billion yuan, an increase of 13.4% over the same period last year, continuing the business trend of steady growth in the first half of the year; realizing a gross profit of 210 million yuan, corresponding to a gross profit margin of 14.3%, an increase of 2.4 pct over the same period last year; turning back a loss of 24.898 million yuan on bad debts, of which the impairment loss on accounts receivable turned back to 11.089 million yuan, the impairment loss on contract assets returned to 12.932 million yuan, and the current profit was repaired. However, in the end, the net profit returned to the mother was 70 million yuan, an increase of only 0.6% over the same period last year, mainly due to the increase in expenses, and the expense rate increased 4.5pct over the same period last year.

Increase the landing or improve the quality of operation. In August 2023, the company successfully launched a private placement of shares, raising 410 million yuan and spending it on digital and "double carbon" projects to strengthen the competitive advantage in emerging fields. With the fixed increase, the company's asset-liability ratio reached 66.7% at the end of the third quarter of 2023, a year-on-year decline of 6.1pct, and the asset structure was significantly optimized; on the other hand, in the first three quarters of 2023, the company's accounts receivable turnover reached 7.2 times, 1.2 times higher than the same period last year, and the proportion of total assets decreased to 9.1%; inventory turnover reached 6.5 times, 0.9 times higher than the same period last year, and the operating capacity was significantly improved.

Maintain a "buy" rating. The company is the engineering leader of China's light industry, with paper mills, sugar mills, wineries and other large and medium-sized light industrial projects accounting for more than 70%, with high performance flexibility with economic recovery.

It is estimated that the EPS from 2023 to 2025 is 0.57,0.75,0.89 yuan, and the corresponding PE is 17.88,13.63,11.53 times.

Risk hint: the pace of economic recovery is not as fast as expected, the company's performance is not as expected, and the project payback risk