Leading the clean energy and chemical tank equipment industry, the global layout of the industry is perfect, and the company has both growth and dividend value. Relying on core pressure vessels and temperature control technology, the company has developed into a leading enterprise in the three major fields of clean energy, chemical environment, and liquid food. The company's clean energy sector contributed more than 60% of revenue in 2023, covering the gas industry chain such as natural gas, petroleum gas, hydrogen, etc., while the chemical environment contributed a similar share to the revenue of liquid food equipment. Through the integration of global resources, the company has gradually established a global layout of the three major business segments, as well as a pattern of significant revenue contributions to overseas and domestic markets. The share of revenue contributions in 2023 was 48.5% overseas and 51.5% domestic, respectively.
In 2023, the company's revenue was 23.63 billion yuan, +20.5% year on year, and net profit to mother was 1.11 billion yuan, +5.6% year over year. The driving force for performance growth was mainly due to revenue growth in the clean energy sector and results achieved in overseas markets and new business development. From 2020 to 2023, the company's revenue and net profit CAGR were about 15% and 5% respectively, mainly due to the global expansion of the chemical environment and liquid food business, and the deepening of the clean energy business layout and operation. The company's dividend payout ratio has remained above 38% since 2019 and reached a new high of around 49% in 2023.
Clean energy: Benefiting from the growing prosperity of the global natural gas industry and actively developing new business formats and overseas markets, hydrogen energy and green methanol businesses have sufficient potential to maintain a high level of global low-carbon transformation combined with oil and gas price differences, driving upward demand in the natural gas industry chain. Global gas production and sales are expected to increase steadily at both ends in 2024. The company's clean energy business covers all aspects of production, processing, transportation and terminal applications of natural gas and petroleum gas. In 2023, revenue was 14.91 billion yuan, +40.8% year-on-year, and gross profit margin was 12.8%.
1) Onshore clean energy: The entire industry chain layout is centered around natural gas. The main products include LNG, LPG, CNG and industrial gas storage and transportation equipment, leading production and sales in the domestic market. Benefiting from the acceleration of the domestic oil-to-gas and coal-to-gas process, in 2023, onshore clean energy revenue was 12.01 billion yuan, or 35.1%, accounting for about 81% of the clean energy sector's revenue in upstream processing and operation-related business areas. By developing non-traditional gas sources and establishing multiple production bases, the scope of business was broadened by developing non-traditional gas sources and establishing multiple production bases, and successfully replicated coke oven gas to hydrogen co-production LNG projects. In the field of midstream storage and transportation equipment and business engineering, we are developing new businesses such as natural gas and LNG emergency peak shifting reserve projects. In the field of terminal references, due to the implementation of the national 6B standard for heavy trucks, the company's LNG vehicle bottle orders increased nearly 39 times in 2023. Overseas, we have actively deployed business in Africa, Saudi Arabia and other regions, and made positive progress in overseas engineering projects. In 2023, overseas onshore clean energy business revenue reached 2 billion yuan, +30.0% over the same period last year, a record high.
2) Clean water energy: Green upgrades in global shipping and strong demand for clean energy to replace traditional fuel vessels have led to continued growth in orders for the company's ships and fuel tank equipment such as LNG. As the market leader for small and medium-sized liquefied gas carriers with the highest market share in the world, the company's clean water energy business revenue in 2023 was 2.2 billion yuan, +74% year-on-year, accounting for about 15% of the clean energy sector's revenue. In 2023, the company's shipping orders were about 9.6 billion yuan, and LNG marine fuel tank orders were nearly 2 billion yuan (+142% year over year). In the early stages, sufficient shipbuilding production capacity was reserved through mergers and acquisitions, and relied on professional shipbuilding capabilities to enrich the product line, and it is expected that it will continue to benefit from the increase in global demand for clean energy ships in the future.
3) Hydrogen energy and green methanol: The hydrogen energy product line covers the entire industrial chain, including manufacturing, storage, transportation, processing, and application, and basically covers all pressure levels and application scenarios. Benefiting from the warming of the global hydrogen energy industry, the company's hydrogen energy business order volume has doubled in recent years. The CAGR of the company's hydrogen energy business revenue reached 76.5% from 2020 to 2023, and revenue reached 700 million yuan in 2023, +59.0% over the same period last year. The hydrogen energy industry has great potential for development, and the company is expected to fully benefit from the rising prosperity of the industry.
Methanol has taken substantial steps as an alternative fuel for ships, and Maersk's first green methanol-fueled ship successfully sailed in 2023. The global green methanol industry is expected to usher in a breakthrough. The company has secured more than 1 million tons of biomass resources and has launched its first project with a partner in Guangdong. It is expected that fuel-based ethanol plants will be rapidly replicated in the future.
Chemical environment: Demand for tanks is generally stable, and new businesses such as aftermarket services and medical equipment have achieved breakthroughs as a global tank leader. In 2023, the company's chemical environment sector was affected by revenue of 4.41 billion yuan, about -17% year over year. As the global economy recovers and chemical price increases, global demand for chemical tanks is expected to grow steadily in 2024, which is expected to support the steady growth of the company's chemical environment sector business. z/oo o>The share of domestic market revenue in the chemical environment sector has risen from 8.3% in 2022 to 12.2% in 2023. The company made progress in both the post-tank market and medical equipment business, with revenue exceeding 100 million yuan (+39.2% year over year) and 200 million yuan (+20.3% year over year) respectively in 2023.
Liquid food: The overseas beer business is stable, and progress is being made in new business areas such as spirits and biopharmaceuticals.
As the world's leading supplier of food equipment and engineering, the company has accumulated high-quality overseas customer resources and completed a global production capacity layout. In 2023, the revenue of the liquid food sector reached 4.29 billion yuan, +18.6% year-on-year. New signatures and on-hand orders for the liquid food business hit a new high in 2023, and the overseas beer turnkey project is progressing smoothly. The overseas beer business is the focus of the liquid food business. It has high-quality customer resources and a perfect global production and marketing network layout, which is expected to benefit from the rising prosperity of the alcohol industry. The company is also making efforts to expand the market for spirits and biopharmaceutical equipment, and has achieved breakthroughs in domestic liquor and whiskey projects and inhalant mixing system equipment. The non-beer business expansion has achieved remarkable results in the past two years, and the share of revenue in the liquid food sector has increased to more than 25%.
Investment advice and profit forecast: The company's leading position in the clean energy sector is stable, natural gas production and sales are growing, and the hydrogen energy industry is developing rapidly, driving demand for equipment and engineering services in the industrial chain. The overall chemical environment and liquid food business is expected to grow steadily, and progress in new business areas is expected to exceed expectations. Furthermore, H shares as a whole are undervalued. Future global capital flows are expected to improve liquidity, and high-quality companies are expected to take the lead in recovering their valuations. The company's net profit from 2024 to 2026 is estimated to be 13.6/16.3/1.81 billion yuan, and the current stock price is 8 times PE 11/9/8 from 2024 to 2026. The first coverage gave a “buy” rating. The target price was 10.1 yuan, and the target valuation was PE15/13/11 times from 2024 to 2026.
Risk warning: Global economic sentiment affects downstream demand; large fluctuations in exchange rates and raw material prices affect company profits; new business development falls short of expectations.