Introduction to this report:

The traditional slag and flue gas energy saving and environmental protection business is expanding rapidly. We are waiting for the expansion of the thermal power flexibility transformation business in 2024, and we are looking forward to breakthroughs in new fields such as hydrogen energy.

Key points of investment:

Maintain an “Overweight” rating. We slightly raised our projected net profit for 2024, 2025, and 2026 to 1.40 (+3%), 1.77, and 202 million yuan, respectively. The corresponding EPS was 1.14, 1.44, and 1.65 yuan, respectively, and maintained the target price of 30.01 yuan, maintaining the “gain” rating.

High performance growth is in line with expectations. 1) In 2023, the company achieved revenue of 1,029 billion yuan, a year-on-year increase of 35%; attributable net profit of 87 million yuan, an increase of 48% over the previous year; deducted net profit of 81 million yuan, an increase of 54% over the previous year. 2) The gross profit margin was 33.71% and the net profit margin was 8.98%, which remained stable.

Traditional furnace slag and flue gas energy saving and environmental protection businesses have expanded rapidly, and new steel slag energy saving and environmental protection treatment businesses have achieved innovative breakthroughs. 1) Benefiting from the impact of policies such as accelerated investment in new thermal power generation and upgrading, the company's slag energy saving and environmental protection treatment system revenue increased 19% year-on-year to 484 million yuan in 2023. 2) The flue gas energy saving and environmental protection business increased 27% year-on-year to 374 million yuan. The increase was mainly contributed by low-temperature flue gas waste heat recovery systems, and revenue from full-load denitrification systems fell 25% to 128 million yuan. 3) We believe that the trend in the release of thermal power flexibility transformation orders is quite certain. As an industry leader with core technology, Qingda will benefit from the explosion of industry demand and wait for the company to expand its thermal power flexibility transformation business in 2024. 4) In 2023, the company achieved a breakthrough in steel slag energy saving and environmental protection business, with revenue of 92 million yuan. The company draws on its rich experience in the power industry to actively extend and expand into non-electric industries such as steel and other initial results.

We look forward to breakthroughs in new fields such as hydrogen energy. In terms of new growth points: 1) Using the field of energy saving and environmental protection in the power industry as a breakthrough, the company plans to expand into steel, chemicals, metallurgy, garbage disposal and other industries. 2) The company is also accelerating the hydrogen energy layout and technology accumulation. It has now built a basic testing center for hydrogen energy technology to actively promote research and development of hydrogen energy technology related to hydrogen production systems and hydrogen storage technology, and is looking forward to breakthroughs.

Risk warning: Industry policy progress falls short of expectations, fluctuating raw material prices, etc.