Introduction to this report:
The company's ballast stone manufacturing business for waste incineration, sanitation and environmental protection equipment is steady. The integrated business of gravity energy storage and wind and solar hydrogen-ammonia alcohol storage is progressing rapidly.
Key points of investment:
Maintain an increase in holdings rating. According to the progress of the project, we raised the 2024-2025 forecast net profit to 7.80 (+17%), 9.60 (+6%), 1.62 billion yuan, EPS 0.31, 0.38, and 0.46 yuan, respectively. Comparable to the company (Table 1), the average value of 2024E PE is 19 times. Considering that the company is a leading gravity energy storage company with scarce technology, the 2024 PE was increased 25 times, and the target price was raised to 7.75 yuan.
Results grew steadily in 2023. In 2023, the company achieved revenue of 5.324 billion yuan, a year-on-year decrease of 21%; after deducting non-vested net profit of 316 million yuan, a year-on-year decrease of 24%. 2024Q1 achieved revenue of 1,252 billion yuan, an increase of 12% over the previous year; net profit after deducting non-vested net profit of 186 million yuan, an increase of 329% over the previous year.
The ballast stone business for waste incineration, sanitation and environmental protection equipment manufacturing is steady. 1) Waste incineration: Overseas projects in Hanoi, Vietnam have obtained commercial operation certificates and are officially put into operation; domestic projects such as Mudanjiang, Changchun Jiutai and Xiangcheng have all been put into operation. The company currently has a total production capacity of 21.55 million tons/day. The amount of domestic waste stored in 2023 was about 7.05 million tons, a year-on-year increase of 44%. 2) Sanitation: As of the end of 2023, the annualized contract amount for the project exceeded 1.1 billion yuan, and the total amount of contracts in hand exceeded 11 billion yuan. 3) Environmental protection equipment:
The company has vigorously promoted the environmentally friendly energy business, actively expanded the international EPC market, and has successively provided technical and key equipment design and manufacturing services for various projects in France, the Maldives and India.
Using gravity energy storage as an entry point, we are fully entering the new energy circuit. 1) At present, the company has started construction of a number of gravity energy storage commercialization projects. The main project of the 2023 Rudong project was capped, and construction of the Zhangye project began within the year. Rudong's first charge/discharge unit was successfully tested in May 2024. The company continues to expand the application of gravity energy storage scenarios, and more projects have blossomed. 2) The company is actively developing integrated wind and solar hydrogen-ammonia alcohol storage projects. It has now landed in important projects such as Tongliao and Liaoyuan, and looks forward to further progress.
Risk warning: New energy transformation progress is lower than expected, incineration or sanitation operations are lower than expected, etc.