The company's revenue in 2023 increased 20.5% year-on-year, and the clean energy business grew at an impressive rate. The dividend ratio increased 2023 revenue by 23.6 billion yuan/yoy +20.5%, gross profit of 15.75% /yoy-1.6pct, net profit of 1,164 million yuan/yoy +7.2%, net profit to mother of 1,114 million yuan/yoy +5.6%. The company's dividend ratio continued to increase, and the dividend rate increased to more than 50% in 2023. Clean water energy grew rapidly due to the boom in the shipbuilding industry in 2023, and demand for clean energy equipment represented by hydrogen energy was strong, but considering that the chemical tank business was under pressure due to the mismatch between supply and demand in the industry in 2023, we expect the company's 24-26 EPS to be RMB 0.66/0.74/0.85 (previous value 0.76/0.90/- yuan), corresponding to a target price of 9.48 HKD (previous value of HK$10.97), “buy”.
Natural gas consumption is picking up, demand for storage and transportation equipment is improving. Revenue from the clean energy sector increased by 40.8% year on year, along with lower LNG prices and improved demand for storage and transportation equipment. In 2023, the clean energy sector achieved revenue of 14.907 billion yuan/yoy +40.8%, gross profit margin of 12.8% /yoy+0.3 pct, and the sector signed new orders of 18.57 billion yuan/yoy +64.9%. 1) Benefiting from the upgrading of global green shipping, the booming shipbuilding industry. In 2023, clean water energy revenue was 2.2 billion yuan/yoy +74.1%, and new orders were approximately RMB 7.48 billion /yoy +174.6%. 2) The company is leading the industry in hydrogen energy generation, storage, transportation, processing, and integrated solutions. In 2023, the hydrogen energy sector achieved revenue of 700 million yuan/yoy +59%, and signed new orders of 380 million yuan/yoy +36.7%. The company's hydrogen energy product sales revenue is expected to maintain a high growth trend in the next three years.
The chemical environment was successfully spun off and the new industry continued to break down, liquid food revenue grew steadily year on year, and the chemical environment business successfully achieved a spin-off listing in 2023 (CIMC Environmental Technology), and achieved revenue of 4.414 billion yuan/yoy -15.8% in 2023, with a gross profit margin of 21% /yoy-1.8pct. As the global supply and demand allocation of tanks is balanced, demand for new standard tanks gradually returned to normal; regionally, the mainland China market grew strongly, and revenue reached 500 million yuan, an increase of 24.3% over the previous year. The liquid food business achieved revenue of 4,293 billion yuan/yoy +18.6% and a gross profit margin of 20.7% /yoy-3.3pct. The company continued to promote the spin-off of the CIMC alcohol division and planned to be listed on the A-share Beijing Stock Exchange; in 2023, the company successfully acquired raw food processing company Künzelmaschinenbau to continue improving front-end equipment and overall solution capabilities in the liquid food industry chain.
Using the segmented valuation method, the target price is HK$9.48.
The clean energy sector business, considering comparable company Wind's unanimous expectation of 24 PE and considering the company's leading position in the clean energy business industry, is expected to fully benefit from the rapid development of hydrogen energy and other industries, giving it a market capitalization of 10.53 billion yuan (net profit forecast 701 million yuan*15x PE for 24 years). The chemical tank business is given a market value of 4.0 billion yuan (net profit of 307 million yuan* 15 times PE), referring to the average value of 13x of the comparable company's 24PE and the valuation premium of the company's leading position. For the liquid food equipment business, refer to the average value of 24PE of comparable companies, with a market value of 3.18 billion yuan (net profit of 318 million yuan* 10 times PE). Reasonable market value of RMB 17.71 billion /HK$19.16 billion, target price of HK$948 (previous value: HK$10.97), “buy”.
Risk warning: The industry's downstream demand recovery falls short of expectations, exchange rate fluctuations risk, and the promotion and use of clean energy falls short of expectations.