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郑煤机(601717):煤机持续高景气 新能源业务稳步推进

Zheng Coal Machinery (601717): Coal Machinery continues to be booming, and the new energy business is progressing steadily

中金公司 ·  11/01/2023

3Q23 performance was higher than our expectations

The company announced 3Q23 results: 1-3Q23 achieved revenue of 27.261 billion yuan, +14.6% year-on-year, and realized net profit of 2,467 billion yuan, +25.8% year-on-year; of these, 3Q23 achieved revenue of 9.038 billion yuan, +9.5% year-on-year, and +0.3% month-on-month, and realized net profit of 786 million yuan, +58% year-on-year.

Benefiting from the high downstream prosperity of the coal machinery business, the company's 3Q23 performance was higher than our expectations.

The coal machinery sector has maintained relatively rapid growth. The revenue of the 1-3Q23 coal machine sector was +15% to 14.17 billion yuan, mainly benefiting from the high level of prosperity in the coal industry. The company's coal machine orders grew rapidly; the net profit of the 1-3Q23 coal machine sector was 2.49 billion yuan, +32% over the same period last year.

The zero-gas sector is doing well. By business, 1-3Q23 ASIMCO's revenue was +17% year over year to 3.18 billion yuan; SEG revenue for the same period was +13% year over year to 9.93 billion yuan. 1-3Q23 ASIMCO's net profit for the same period was -26% to 300 million yuan. After excluding the impact of asset disposal income for the same period of the year, the net profit of the business was +35%; SEG's net profit loss for the same period was about 600 million yuan.

Development trends

The coal machine business continues to be booming, and the penetration rate of intelligence has further increased. The coal industry is an important energy pillar in the country. The price of thermal coal has remained relatively high in recent years, and the profitability of downstream coal companies is strong, supporting the capital expenditure of the coal machinery and equipment industry. The company's orders and repayments in the coal machinery sector in the first half of the year increased by 45% and 33%, respectively. Judging from the trend of new orders signed in the third quarter of this year, the new orders signed showed an accelerated growth trend. We believe this may be expected to guarantee the high prosperity of the company's coal machinery business in the first half of next year. According to the company announcement, Hengda Intelligent Control has submitted application materials for the initial public offering of shares to the Shanghai Stock Exchange and listing on the Science and Technology Innovation Board. We believe that intelligent upgrading may be an important structural growth point for the coal machinery sector in the future.

SEG's operations are basically stable, and the new energy motor business is expanding smoothly. SEG has basically achieved loss reduction and business stability through business restructuring and integration in previous years and accounting for impairment of goodwill. ASIMCO has made major breakthroughs in shock-absorbing and sealing businesses in the NEV zero market, supporting the rapid year-on-year increase in ASIMCO's revenue this year. The new energy high voltage motor business expanded by the company in Changsha has begun to enter the small-batch supply stage, and a portion of revenue has been confirmed. We expect that with the subsequent introduction of more models by major customers, the company's new energy high voltage motor business may contribute new performance growth points to the company.

Profit forecasting and valuation

Due to the high level of prosperity in the coal machinery business, we raised our net profit in '23 by 3.5% to $3.157 billion, keeping our 24-year profit forecast basically unchanged. The current A-share/H-share price corresponds to the 23/24 price-earnings ratio of 7.0x/6.0x and 3.7x/3.1x. Combined with the SEG business, we may enter a healthy state of operation. We raised the target price of A shares by 14.8% to 16.85 yuan, corresponding to the price-earnings ratio of 9.5x/8.2x in 23/24, which is 36.1% higher than the current stock price. The target price of H shares increased by 14.8% at the same time to HK$9.70, corresponding to the price-earnings ratio of 4.9x/4.1x in 23/24, which is 31.4% higher than the current stock price. Both A/H stocks maintained outperforming industry ratings.

risks

Intelligent capital expenditure by coal companies fell short of expectations; the increase in raw material prices exceeded expectations.

The translation is provided by third-party software.


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