The company is a leading domestic construction materials inspection leader, and diversified business development has opened up new growth. The company is a leading state-owned inspection and testing leader. In recent years, it has actively carried out mergers and acquisitions around a “cross-field and cross-region” strategy. It has now formed five comprehensive business platforms, including inspection and testing, certification, testing instruments and intelligent manufacturing, measurement and calibration, scientific research and technical services. The share of construction and building materials inspection revenue has declined with the volume of new businesses such as environmental testing, and the business is developing comprehensively. As endogenous extension continues to advance in recent years, the company's revenue continued to grow. Revenue increased 9.59% year on year to 2.66 billion yuan in '23. Against the backdrop of a slowdown in domestic economic growth, etc., the company's performance was under phased pressure, and the company's net profit returned to mother +1.11% to 0.257 billion yuan year-on-year in '23.
China's carbon trading market continues to expand, the carbon pricing mechanism is gradually maturing, and the long-term space is broad. In the context of dual carbon, the importance of carbon trading as an effective means of promoting carbon emission reduction is highlighted. China's carbon trading market consists of two parts: quota transactions (CEA) and voluntary emission reduction transactions (CCER). Among them, CCER was restarted in January 2024, providing new options for enterprises to settle carbon emission quotas at low cost. China launched a national carbon emissions trading system in 2021. Initially, it mainly covers the power industry. In the future, it will gradually expand to key emission fields such as building materials, steel, non-ferrous metals, petrochemicals, chemicals, and civil aviation, and the annual coverage of carbon dioxide emissions will further increase. Shi Yichen of the Central University of Finance and Economics predicts that with the continuous expansion of the carbon market and the gradual maturity of the carbon pricing mechanism, the CCER market is expected to continue to expand to tens of billions of dollars as traders in the carbon trading market continue to grow. By the end of '23, the cumulative turnover of the national carbon emissions trading market had reached 0.44 billion tons, with a turnover of about 24.9 billion yuan. Contract execution volume and carbon prices were in an upward range, and the industry space continued to expand.
The company has a strong first-mover advantage in the dual-carbon field, and the platform-based layout continues to advance. Since entering the carbon market in 2009, the company has now obtained various domestic and foreign qualifications such as CDM, VCS, GS, etc., and provides one-stop services such as third-party verification of carbon emission rights transactions, energy saving reviews, and energy saving and emission reduction technology consulting, and has provided services to thousands of enterprises in more than 20 provinces and cities. In 2023, the company's carbon services business revenue was 0.033 billion yuan, up 125.6% from the same period, and has continued to increase in recent years. The company has formed a green and low-carbon technology verification platform covering the cement, iron and steel, petrochemical, chemical and non-ferrous industries. With the completion of the “Building Materials Industry Carbon Emission Management Platform Construction Project Based on Blockchain Technology”, the company's carbon service capabilities will be further enhanced.
Investment advice: We expect the company's 24-26 revenue to be 3.083/3.528/3.929 billion yuan, net profit to mother 0.306/0.356/0.37 billion yuan, corresponding PE 15.2/13/12.6x, respectively. Maintain a “Recommended” rating.
Risk warning: risk of fluctuating downstream demand, risk of damage to credibility and reputation, risk of weakening management capacity