The company's recent situation
The company announced revenue and order data for 1-3Q23:1-3Q23 revenue was 16.64 billion yuan, up 17.0% year on year, of which 3Q23 revenue was 5.88 billion yuan, up 11.6% year on year. Revenue data was in line with expectations. 1-3Q23 signed a new order of 19.76 billion yuan, an increase of 28.3% over the previous year. As of the end of the 3Q23 period, the company had on-hand orders of 22.16 billion yuan, an increase of 27.6% over the previous year.
reviews
Domestic demand for clean energy is picking up, and environmental demand for chemicals is declining. 1-3Q23/3Q23 Clean energy revenue was 99.8/3.69 billion yuan, +33.2% year-on-year, with rapid growth, mainly due to the recovery in domestic LNG demand. Domestic LNG prices have gradually returned to normal levels since this year, showing economic efficiency. According to the National Development and Reform Commission, China's apparent consumption of natural gas in 1-8M23 was 259.8 billion cubic meters, +7.4% year-on-year, of which August was 32.7 billion cubic meters, +11.1% year-on-year. 1-3Q23/3Q23 Chemical environmental revenue was 36.4/1.19 billion yuan, -7.9%/-15.2% year-on-year, mainly due to the balance between global tank supply and demand, and the decline in standard tank demand. 1-3Q23/3Q23 liquid food revenue was 30.1/1.0 billion yuan, +7.2%/-8.7% year-on-year.
There has been a rapid increase in new and ongoing orders. 1-3Q23 signed new orders of 19.76 billion yuan, an increase of 28.3% over the previous year; of these, the clean energy/chemical environment/liquid food sector signed new orders of 132.3/29.7/3.56 billion yuan respectively, +61.5%/-19.3%/+1.1% over the same period last year. As of the end of the 3Q23 period, the company had orders in hand of RMB 22.16 billion, +27.6% year-on-year; of these, in-hand orders for clean energy/chemical environment/liquid food were RMB 155.1/14.4/5.21 billion respectively, +50.3%/-39.4%/+11.3% year-on-year.
Water clean energy business is in high demand. The 1-3Q23 water clean energy business signed a new order of 4.71 billion yuan, +137.8% over the same period last year. This is mainly due to the strong demand for clean energy to replace fuel vessels in the context of high prosperity in the shipping industry and more economical LNG prices, driving a sharp increase in demand for LNG marine fuel tanks. The 1-3Q23 onshore clean energy business signed a new order of 7.94 billion yuan, +37.3% over the same period last year.
The hydrogen energy business is expanding steadily. 1-3Q23/3Q23 hydrogen energy business revenue was 44/ 170 million yuan, +62.7%/+67.7% year-on-year, mainly due to the rapid increase in sales of hydrogen energy storage and transportation equipment, vehicle hydrogen storage tanks and hydrogen supply systems. In terms of orders, the 1-3Q23 hydrogen energy business signed new orders of 580 million yuan, +34.2% year-on-year, of which storage/transportation respectively signed 20/30 million yuan, +101.4%/+15.8% year-on-year; as of the end of the 3Q23 period, the hydrogen energy business had orders of 4.2 billion yuan, +55.8% over the same period. Considering the company's layout in the entire hydrogen energy equipment industry chain and its strong R&D advantages, we are optimistic about the future development trend of the company's hydrogen energy business.
Profit forecasting and valuation
Keep outperforming industry ratings and profit forecasts unchanged. The company is currently trading at 10x/9x 23e/24e P/E. Considering the downward shift in the valuation center of the Hong Kong stock market, the target price was lowered by 21% to HK$9.00, corresponding to 13x/12x23e/24e P/E, with 30% upside.
risks
New business development falls short of expectations; environmental demand for chemicals continues to decline.