New orders have maintained good growth in 24 years
The company announced that new orders of 90.712 billion yuan were signed in January-January '24, +28.3% year-on-year, and 40,055 billion yuan of new orders were signed in a single month in February, +6.7% year-on-year. Under the “good start” requirements of the State Assets Administration Commission in the first quarter, the company's orders maintained a good growth rate. The company's equity incentive exercise target requires net profit deducted from non-return to mother in 23-25 to not be less than 15% compared to the 21-year compound growth rate, and deducted unweighted ROE of not less than 9.05%, 9.15%, and 9.25%, respectively. Currently, the company's valuation is still at a relatively low position in history. Previously, the company announced that it won a large overseas order of 65 billion yuan. In the context of construction companies gradually going overseas, we expect that the overseas business of subsequent companies may have good room for growth.
The main chemical industry continues to boom, and overseas orders maintain a high growth trend
By category, new orders for chemical engineering, infrastructure, and environmental management were 681.32, 149.02 billion yuan, and 4,052 billion yuan respectively. The main chemical industry continued to grow at a high rate of +28%, +17.9%, and +195.8%, respectively; orders for design consulting and new industrial materials were signed at 718 billion yuan and 1,341 billion yuan respectively, or -53.6% and +18.7% year-on-year respectively. Looking at the subregion, domestic and overseas orders were newly signed at 782.84 billion yuan and 12.428 billion yuan respectively, up 19.7% and 149.5% year-on-year respectively. Domestic orders have maintained a steady increase. At the same time, overseas orders have continued their high growth trend over the past 23 years. In January-January '24, the average contract amount for a single order was 887 million yuan, +31.9% over the same period. A total of 90.712 billion yuan of new contracts were signed, accounting for 40.35% of the total number of new contracts signed.
New industrial materials are progressing steadily, and the majority shareholders have increased their holdings, showing confidence
At present, the company's adiponitrile project has completed technical reform, and the overall progress of the project is progressing smoothly. Among them, acrylonitrile continues to operate at full load, and the adiponitrile production line is being tested at low load, and the load will gradually increase in the future. Earlier, the company announced that China Chemical Engineering Group, the majority shareholder, and Guochemical Company, will increase their holdings of the company's shares over the next 12 months from February 19, with an increase of 2-4 billion yuan. As of the close of March 13, 2024, the company's PE (TTM) and PB (LF) were 7.7 and 0.75 times, respectively, in the historical rankings of 2.4% and 1.7% since 2010. The increase in shareholders' holdings shows confidence in the company's future development.
The industry has prospects, or may benefit from the “Belt and Road” demand catalysis, maintain the boom in chemical engineering from “buy” ratings, continue to optimize the business model, and the chemical engineering national team has good prospects for growth. State-owned enterprise reform continues to be deepened, such as equity incentives, etc., and operating vitality continues to increase. Affected by factors such as local government debt and the suspension of new infrastructure construction in 12 provinces, we lowered the company's net profit forecast for 23-25 to 54/60/70 billion yuan (previous value 60/71/85 billion yuan), +0.3%/+10.7%/+16.9% year-on-year, respectively, maintaining the “buy” rating.
Risk warning: The infrastructure investment boom fell short of expectations, the gross margin of new orders fell short of expectations, exchange rates fluctuated greatly, and the carry-over of engineering orders slowed down.