Performance review

3Q23 performance is lower than we expected.

The company announced results for the first three quarters: revenue of 2.196 billion yuan, + 3% year-on-year The net profit is 347 million yuan,-9.2% from the same period last year, corresponding to 892 million yuan from 3Q23, + 8.3% from the same period last year, + 18.1% from the previous year, and 153 million yuan from the same period last year, 11.4% from the same period last year, and + 31.9% from the previous year, which is lower than our expectation, mainly due to the continuous drag on the performance of biomass assets under the influence of inadequate subsidies and fuel prices.

In the first three quarters of 23, 1) the company's industrial energy-saving income was 1.11 billion yuan, compared with the same period last year + 21.48%. 2) the building energy-saving sector earned 655 million yuan, compared with the same period last year, + 16.31%. 3) Comprehensive resources utilization plate income 290 million yuan, year-on-year-39.93%, of which biomass income is 133 million yuan, year-on-year-58.61%. Corresponding to 3Q23:1) industrial energy conservation income 505 million yuan, year-on-year + 29.5%, month-on-month + 50.1%, growth; 2) Building energy efficiency income 238 million yuan, year-on-year + 6.9%, month-on-month-1.1%; 3) Comprehensive resources utilization income 94 million yuan, year-on-year-40.1%, month-on-month-25.7%.

Trend of development

3Q installation and the use of hourly growth to drive the company's industrial and commercial photovoltaic performance is outstanding. The company's 3Q23 industrial energy-saving income is 505 million yuan, year-on-year + 29.5%, month-on-month + 50.1%. We expect more than 80% of the industrial energy saving income to come from industrial and commercial photovoltaic operation and power generation. 3Q industrial and commercial photovoltaic revenue growth is bright, driving force: 1) the company's self-supporting industrial and commercial photovoltaic installation is growing rapidly. In mid-2023, the company accumulated self-owned industrial and commercial photovoltaic installation 1.61GW, year-on-year + 38.8%. 2) with the high increase in utilization hours, the number of photovoltaic utilization hours in Guangdong Province in July / August is 16.7% compared with the same period last year. Compared with the national average of-7.6% Universe 2.4% bot 3), we believe that the newly signed power stations of the company are all parity projects, which is lower than the comprehensive electricity price of the previous subsidized projects. at the same time, 23 years of industrial and commercial photovoltaic competition has intensified, and the discount ratio of electricity price is expected to increase. However, the company's fixed electricity price contract model can avoid the downside risk of electricity price.

The number of new projects signed by 3Q keeps growing month-on-month, and the number of new projects signed for the whole year is expected to exceed 800MW. The number of newly signed industrial and commercial projects in company 3Q is 223.4MW,-7% year-on-year and + 51% month-on-month, with a year-on-year decline narrower than that of 2Q. We expect that the number of newly signed projects for the whole year is expected to exceed 800MW, making a good reserve for the company's future installation growth.

Industrial and commercial energy storage projects have been landed, optimistic about 24 years of industrial and commercial photovoltaic growth and energy storage business development.

According to the company's announcement in September, the company is currently combing the customers who can carry out energy storage business among the cooperative customers, actively promoting qualified customers to install energy storage, and at the same time developing new customers, at present, Hitachi elevator and China Sea Fulu and other optical storage integration projects have been officially put into production.

Profit forecast and valuation

Due to the continued drag on biomass performance, we cut the net profit of 2023 Universe by 12.5% to RMB 527,775 million in 2024. Maintain the outperform industry rating and lower the target price by 10% to 6.5 yuan, corresponding to the price-to-earnings ratio of 47pm 2024, which is 18% upside compared to the current share price, which corresponds to the price-to-earnings ratio of 40xx 2024.

Risk

The risk of deterioration of industrial and commercial photovoltaic competition, energy storage business development is not as expected, biomass drag is more than expected.