Recommended logic: 1. The global shipbuilding cycle boom is rising, which is transmitted to the shipbuilding industry. In the first half of 2023, the company signed a new order of 6.99 billion yuan for low-speed engines, an increase of 30.6% over the previous year. 2. Marine engines are the core link in the industrial chain. The company's diesel engine business can fully enjoy the boom in the current shipbuilding cycle. The company's net profit is expected to increase by 95.4% to 146.5% year-on-year in 2023. 3. As shipping emission requirements become more stringent, the proportion of ships powered by LNG and methanol fuel has increased markedly, and research and development of ammonia-fueled and hydrogen-fueled ship technology is accelerating. The company has obtained a breakthrough of zero batch orders for methanol fuel mainframes, and it is expected that the release of related orders will accelerate in the future.
With the recovery of the shipping market, shipowners' business conditions have greatly improved, and new shipbuilding orders have begun to be placed due to the need to renew old ships and non-environmentally friendly ships. The boom in the shipping market has increased the profits of shipping owners, further optimized balance sheets, and the aging situation of shipping vessels is serious, so a large number of container ship orders broke out in '21. In '22, new orders for container ships began to decline, but they are still at a historically high level, while orders for LNG carriers are increasing. Bulk carrier orders began to grow at the end of '23. Different segments have different levels of prosperity, and there is a clear trend of ship type rotation in the new ship market.
The global shipping industry chain starts with the supply of upstream raw materials, is manufactured by midstream shipyards, and extends to downstream shipping company applications. Shipyards are taking on new orders, and the boom is also expected to spread to upstream ship suppliers. At the same time, as environmental protection policies become stricter, the global shipbuilding market will accelerate transformation towards green ships, providing an opportunity for the high-quality development of related shipbuilding industries. In the first half of 2023, the company signed a new order of 6.99 billion yuan for low-speed engines, an increase of 30.6% over the previous year, including 4.33 billion yuan for dual-fuel engines, an increase of 32.8% over the previous year; it also obtained a breakthrough of zero batch orders for methanol fuel engines.
The scale of the diesel engine sector has expanded, order volume and price have risen sharply, and the company's profit has increased significantly. The company began a major restructuring in 2015, and further completed the restructuring of the diesel engine power business in 2022, increasing the volume of the diesel engine business. 2023H1's revenue share reached 41.4%, contributing 46.3% to the company's gross profit. As a core link in the industrial chain, it is expected to enjoy this upward cycle. The company expects to achieve net profit of 650 million yuan to 82 million yuan in 2023, an increase of 320 million yuan to 4.9 billion yuan compared with the same period last year (statutory disclosure data), an increase of 95.4% to 146.5% over the previous year.
Profit forecasting and investment advice. The company's revenue for 2023-2025 is estimated to be 47.43 billion yuan, 53.93 billion yuan and 62.61 billion yuan respectively, with net profit attributable to mother of 790 million yuan, 1.29 billion yuan and 2.23 billion yuan respectively, and EPS of 0.36 yuan, 0.59 yuan and 1.02 billion yuan respectively. Considering that the company's main business, diesel power, is highly related to the shipbuilding industry, 3 listed companies in the shipbuilding industry were selected as valuation references. We believe that the company will continue to build core competitiveness, and profitability is expected to further improve. Coverage for the first time, and it is recommended to continue to pay attention.
Risk warning: risks such as exchange rate fluctuations, shipbuilding demand falling short of expectations, and fluctuations in raw material prices and labor costs.