The revenue growth rate in 2023 was impressive, and the revenue contribution of electronic bulk gas and helium gas was outstanding. According to the company's annual report, the company's revenue in 2023 was 1,835 billion yuan, up 19.20% year on year; net profit to mother was 320 million yuan, up 35.73% year on year. Electronic bulk gas revenue was 1,211 billion yuan, up 25.14% year on year, accounting for 65.96% of total revenue; gross profit margin was 39.10%, a decrease of 5.42 pct year on year. General Industrial Gas's revenue was 515 million yuan, up 15.60% year on year, accounting for 28.03% of total revenue; gross profit margin was 24.35%, down 5.05 pct year on year.
Revenue growth mainly comes from: 1) Acquiring electronic bulk gas projects such as Xi'an Xinxin, Guangzhou Zengxin, Guangzhou Guangxin, Shenzhen Saifa, and Beijing Xilex, and actively promoting the construction of electronic bulk gas stations such as the Hefei Comprehensive Insurance Zone, Huaxing Optoelectronics T9, Hefei Changxin Phase II, Beijing Changxin Electric Collection, and Shanghai Dingtai Jiangxin; 2) Helium gas business sales continued to grow as helium production bases in Guangzhou and Wuhan were put into operation.
The company's electronic bulk gas business has formed a “1+3” competitive pattern with the three major foreign gas companies, and the supply chain system for the helium gas business has been further improved. Citing data from Zhuochuang Information in the company's annual report, the company's electronic bulk gas market share in 2023 was 11.75%. The company's 2023 electronic bulk gas on-site gas production project accounted for 24.6% of domestic production capacity, ranking second. It has formed a “1+3” competitive pattern with the three major foreign-funded gas companies of Linde Gas, Liquefied Air, and Air Chemical. The company is the first domestic gas company in China to directly participate in the construction of the helium global supply chain. With the completion and commissioning of helium production bases in Guangzhou and Wuhan, the company is developing more helium resources, global supply chain construction is becoming more and more perfect, and market supply capacity is steadily improving, further consolidating the company's leading position in the helium business.
The company has achieved remarkable results in R&D and innovation, increasing digital, intelligent and unmanned operation and management. In 2023, the company invested 887.596 million yuan in R&D, an increase of 23.79% over the previous year. The company has carried out more than 50 R&D projects focusing on core technologies, including system-level gas production technology, gas storage and transportation technology, digital operation technology, and gas application technology. The company's scientific research and innovation highlights are as follows: 1) independently developed the “Super-N” and “Fast-N” series nitrogen generation devices, reaching the same level of technology as foreign gas companies; 2) independently developed subsupercritical carbon dioxide delivery technology, becoming one of the few companies in the world to master this technology, filling the domestic gap; 3) launching the next-generation intelligent gas cylinder operating system “HandlingPilot” to make gas cylinder filling “unmanned”. 4) Break through key technologies in the helium supply chain, build a zero-loss helium green factory, and enhance the company's helium operation capacity.
Profit forecasting and valuation. We expect the company's revenue for 2024-2026 to be 22.42/27.49/3.398 billion yuan, net profit to mother of 3.73/4.69/611 million yuan, and corresponding EPS of 0.28/0.36/0.46 yuan.
We used the PE valuation method, referring to the industry average and considering the company's significant competitive advantage and domestic replacement attributes in the field of electronic bulk gases, and gave the company 45.0-50.0X PE in 2024. We believe that the company's reasonable market value is 167.73-18.637 billion yuan, corresponding to a reasonable value range of 12.71-14.13 yuan/share, maintaining a “superior to the market” rating.
Risk warning. Risks such as increased market competition, falling short of expectations in technology upgrades and iterations, and falling gas prices.