2023Q1-Q3's performance continued to grow. New thermal power orders gradually released the 2023 Q1-Q3 company's revenue of 512 million yuan, up 48.24% year on year, net profit of 206.12,900 yuan, up 62.8% year on year; the company's Q3 revenue was 160 million yuan, up 21.32% year on year, and net profit was 7.7183 million yuan, up 22.82% year on year. The company's revenue and net profit continued to grow in the first three quarters, mainly due to the year-on-year increase in orders related to the company's thermal power auxiliary equipment. Considering that the pace of thermal power flexibility transformation is slowing down, we have lowered our 2023-2025 profit forecast. The estimated net profit for 2023-2025 is 1.07/1.47/180 million yuan (previous value was 1.19/1.77/239 million yuan), corresponding EPS is 0.87/1.19/1.46 yuan (previous value was 0.97/1.44/1.94 yuan), and the current stock price corresponding to PE is 20.6/15.0/12.2 times, respectively. Considering the company's steel slag business and hydrogen energy business, the realization of the company's steel slag business and hydrogen energy business Breakthrough, demand for thermal power construction is improving, and the “buy” rating is maintained.

The scale of new thermal power installations continued to increase, and business orders for thermal power auxiliary equipment were gradually implemented from January to September 2023. The new installed capacity of thermal power in China was 39.44GW, an increase of 67.19% over the previous year, and the scale of new thermal power installations continued to grow at a high level. Judging from the approved volume, the country's total approved coal power installed capacity of 50.40 GW in the first half of 2023 has reached 55.56% of the country's approved installed capacity, far exceeding the total amount approved in 2021. It is expected to increase demand for thermal power equipment. The company is expected to continue to benefit as a supplier of thermal power auxiliary equipment.

Accelerate steel slag treatment and hydrogen energy business layout and create a new growth pole. In June 2023, the company won the bid for Shougang Group's comprehensive utilization equipment contract for steel slag industrialization, with a contract amount of 100 million yuan. In September 2023, the company signed a quadripartite agreement with Yuanda Hechuang, a second-level subsidiary, and Shirui Energy. Qingdao Xingshengda, a third-level subsidiary, and Shirui Energy signed a quadripartite agreement. Qingdao Xingshengda invests in the construction of a 120MW fish-light complementary project in Ligezhuang Town, Jiaozhou, and constructs 20MW hydrogen production equipment, with a total project investment of 549 million yuan. After completion of the project, Qingdao Xingshengda divested the hydrogen production project into the company's lower-level subsidiaries, and Shirui Energy's acquisition of the 120MW Yuguang complementary project. It is expected that the implementation of this project will build the foundation for the company's hydrogen equipment manufacturing and hydrogen energy project operation. Based on the main business of thermal power auxiliary equipment, the company continues to expand emerging businesses such as steel slag treatment and hydrogen energy, creating a new growth pole, and is promising for future development.

Risk warning: Steel slag orders fell short of expectations; hydrogen energy development fell short of expectations; and thermal power construction fell short of expectations.