Investment logic
Traditional energy+new energy, large-scale power side investment and construction are booming, driving the company's business growth.
The company belongs to Huadian Group, which is rich in resources. Its business covers the four major fields of Huofengguang hydrogen, and provides EPC and equipment products. The main growth points are in the thermal power, ocean wind and hydrogen energy sectors, driven by incremental construction and inventory transformation of thermal power, and high demand for new offshore wind installations and hydrogen energy equipment.
Investment in thermal power has re-entered the boom cycle, and the leading position in thermal energy engineering is stable. The implementation of the 11M23 coal and electricity price mechanism stabilizes long-term income expectations. 1Q24 thermal power investment was +52.4% year-on-year. Thermal power investment re-entered the boom cycle, driving strong demand for auxiliary equipment, mainly four major piping systems and air cooling systems. Huadian Group accounts for 9% of the country's thermal power installations, and the company accounts for nearly 50% of sales within the group. Benefiting from the Group's order resources, auxiliary equipment systems achieved a high market share. Among them, the pipeline market share reached 50%, and the industry pattern stabilized and the leading position was remarkable. Attention was paid to the role of thermal power insurance and supply in '21, but construction fell short of expectations. As new energy consumption issues intensified and related policies were implemented, construction was accelerated in the second half of '23. New systems and inventory transformation jointly drove the growth of the company's thermal energy engineering business. The total number of related contracts exceeded 3 billion yuan in the past three years.
Entering the wind power industry has benefited from high prosperity, and sea breeze+land wind have developed together. The wind power installation process is accelerating, land wind installation is developing steadily, and the certainty of sea wind installation is high. We expect that in 2024/25, the new installed capacity of Haifeng will reach 13/24 GW, the CAGR will reach 78%, and the industry will continue to thrive. The company has broken through overseas business and formed an integrated marine wind layout for manufacturing, construction and installation, and has resource and location advantages: 1) give full play to the advantages of the subsidiary's three major bases of heavy industry machinery, Caofeidian Heavy Industries, and Wuhan Huadian; 2) give full play to the advantages of its own port port base in Caofeidian, develop deep sea breeze operations, and enjoy regional advantages. It will benefit from the implementation of Tangshan's “14th Five-Year Plan” plan.
Collaborate with the Group to achieve a breakthrough in hydrogen energy business, with an integrated layout of “production, storage and use”. Guided by policy planning guidelines and integrated wind and solar hydrogen storage projects, the domestic green hydrogen production capacity has reached 5.8 million tons, the operating rate has reached 36%, and green hydrogen has entered a stage of high-growth development. The company's hydrogen energy engineering business covers various aspects such as hydrogen production, hydrogen storage, alcohol and ammonia applications, hydrogen energy project EPC, etc., and is backed by Huadian Group. It has completed three major projects: Delingha PEM hydrogen production, Tieling off-grid wind power hydrogen production, and integrated hydrogen production for Damaoqi wind hydrogen storage, and achieved revenue of 510 million yuan in 23. At the same time, it can collaborate on the expansion of the main business, such as promoting hydrogen production from offshore wind power and green hydrogen to prepare green ammonia green methanol, etc., to achieve differentiated competition. The product has begun project verification. The company has begun project verification. The company has expanded its dual line of development. Orders for hydrogen energy will continue to grow.
Profit forecasting
We expect the company to achieve revenue of 86.64/104.28/12.478 billion yuan and net profit to mother of 275/3.35/425 million yuan in 24-26, corresponding to 24.7/20.3/16.0 times PE. The company relied on Huadian Group's rich resources, and thermal power, sea breeze, and hydrogen energy blossomed more. The company was given 30 XPE in 24 years, corresponding to a target price of 7.07 yuan. The first coverage was given, and a “buy” rating was given.
Risk warning
Market expansion outside the Group falls short of expectations, emerging business progress falls short of expectations, risk of exchange rate fluctuations