Core views:

Results are in line with previous forecasts. The company released its annual report on April 22. In 2013, the company achieved revenue of 2,133 billion yuan, net profit of 269 million yuan, +18.16% year-on-year, net profit of 244 million yuan, +23.17% year-on-year; looking at Q4 alone, the company achieved revenue of 590 million yuan, +16.18% year-on-year, net profit of 67 million yuan, +38.71% year-on-year, net profit of non-return to mother of 66 million yuan, and +83.65% year-on-year.

The various businesses are balanced, and energy-saving services are the highlight of growth. Looking at the situation of each business, the metallurgical industry/ nuclear power industry/ energy industry/ energy-saving service industry accounted for 17.1%/32.6%/30.6%/12.2%/12.2%/12.2%/12.2% of current revenue, respectively. The gross margin was 32.02%/40.31%/11.59%/35.42%, respectively, and the gross margin was relatively stable.

Actively expand into new industries. In terms of hydrogen energy, through its subsidiary Shentong New Energy, R&D and production of special high-pressure valves required for hydrogen fuel cells, hydrogen storage systems and hydrogen fueling stations, etc., mainly for 70-105MPa high-pressure hydrogen valves, covering high-pressure valves from hydrogen production, hydrogen storage, and hydrogen transportation to hydrogen fueling stations; in the semiconductor equipment field, the company established “Shentong Semiconductor” in December 2022 to mainly develop and produce special valves for semiconductor equipment. Currently, the vacuum valves and ultra-clean valves developed by the company have entered the user-side prototype verification stage; shares in Hongpeng Airlines and actively lays out the low-altitude economic layout, pioneering new growth curve.

Profit forecasting and investment advice. We expect the company's revenue for 24-26 to be 25.44/29.60/3.379 billion yuan, and the net profit for the same period is 337/4.21/503 million yuan, EPS 0.66/0.83/0.99 yuan/share for the same period. Referring to the valuation level of comparable companies, considering that the company's field has high technical barriers and excellent profitability, and is expanding into the fields of wind power, EMC, etc., and short-term industry fluctuations do not change the long-term positive trend, we give a PE valuation of 20 times in 24 years, corresponding to a reasonable value of 13.27 yuan/share , maintaining a “buy” rating.

Risk warning. The risk of the nuclear power industry falling short of expectations; the risk of traditional industries falling short of expectations; the risk of rising costs of raw materials, etc.; the risk of repeated epidemics.