The company disclosed its third quarterly report in 2023. From January to September in 2023, the operating income was 2.2 billion yuan, an increase of 3.0% over the same period last year, and the net profit returned to the mother was 350 million yuan, down 9.3% from 380 million yuan in January-September 2022 after accounting policy changes. Of this total, the operating income from July to September was 890 million yuan, an increase of 8.3 percent over the same period last year, and the net profit returned to the mother was 150 million yuan, which decreased by 11.4 percent after accounting policy changes.

We will continue to cultivate industrial energy conservation and building energy conservation. From January to September in 2023, the operating income of industrial energy-saving business reached 1.11 billion yuan, an increase of 21.5 percent over the same period last year, which was better than 20.8 percent in the first quarter and 15.5 percent in the first half of the year. In 2023, the installed capacity of the distributed photovoltaic project to be carried out in each quarter of 2023 is 13.9 × 14.8 / 223000 kW, with a total investment of 6.6 / 910 million yuan, which is accelerated quarter-on-quarter, laying the foundation for accelerating the income growth of the industrial energy-saving sector in the future. The building energy efficiency business has maintained good growth, with operating income of 6.6 yuan in the first three quarters, an increase of 16.3% over the same period last year.

Biomass projects have a great impact on the overall operation of the company. Due to factors such as inadequate subsidies for biomass projects and high fuel prices, the growth rate of business income of 2022A/2023Q1/2023H1/2023Q1-3 comprehensive resources utilization sector is-0.3%, respectively, 52.7%, 39.9%, 39.9%, 39.9%, 39.9%, respectively. According to the China News, Southern Power Grid Integrated Energy (Guangzhou) Co., Ltd., which mainly operates and manages biomass comprehensive resources utilization projects, lost 63.55 million yuan in the first half of 2023.

Profit forecast and investment advice. The company will seize the development opportunities of strategic emerging industries such as decentralized wind power, and is strategically adjusting to withdraw from the biomass power generation business. In June, the company announced the implementation of the excess profit sharing plan from 2023 to 2025, in which the target profit value of excess profit sharing in 2023 is 720 million yuan, and the incentive mechanism has been improved. We maintain the forecast that the net profit of homing from 2023 to 2025 will be 6.5 yuan 8.4 yuan / 1.06 billion yuan respectively, an increase of 17.7%, 28.4%, 26.9%, respectively, from a year-on-year increase of 17.7% to 0.28 yuan per share. The industry is relatively unaffected by macroeconomic, still give the company a valuation of 35 times PE in 2024, corresponding to a reasonable value of 7.73 yuan per share, maintaining a "buy" rating.

Risk hint. The withdrawal of biomass projects is not up to expectations, the promotion of energy-saving projects is not up to expectations, the risk of contract energy management mode, and so on.