24H1 achieved net profit of 1.69 billion yuan to mother, a year-on-year decline of 16%. 24H1 achieved operating income of 33.46 billion yuan, a year-on-year increase of 12%; realized net profit of 1.69 billion yuan, a year-on-year decrease of 16%; net profit after deducting non-return to mother of 1.63 billion yuan, a year-on-year decrease of 10%. Corresponding to 24Q2, the company achieved operating income of 18.4 billion yuan, up 21% year on year; net profit to mother was 0.79 billion yuan, down 20% year on year and 13% month on month; net profit without return to mother was 0.58 billion yuan, down 33% year on year and 45% month on month.

The growth rate of coal power performance has slowed, and the wind power business has turned losses into profits. 24H1's nuclear power and power plant service profit growth rate was impressive. The wind power business turned a loss into a profit, but the growth rate of the coal power business slowed, and profits from the engineering and trade business were under pressure, leading to a decline in the company's performance. Among them, the 24H1 coal and electricity sector had revenue of 8.52 billion yuan, up 16% year on year; gross profit margin was 16%, down 3 pcts year on year. The 24H1 gross margin of the coal and electricity sector declined due to the company's centralized delivery of some of the low price orders signed before the current round of approval and high growth in coal power. We estimate that 24H1 coal power equipment contributed about 0.63 billion yuan to net profit, up 1% year on year; power plant service business contributed about 0.76 billion yuan, up 49% year on year; nuclear power contributed about 0.24 billion yuan, up 321% year on year; wind power contributed about 0.004 billion yuan, reversing year on year loss; engineering and trade loss was 0.16 billion yuan, down 143% year on year; other net profit contributed about 0.23 billion yuan.

24H1 signed a new order of 56.07 billion yuan, and the growth rate of coal and electricity orders remained high. 24H1 signed a new order of 56.07 billion yuan, a year-on-year increase of 15%. Corresponding to 24Q2 new orders of 29.74 billion yuan, up 13% year on year and 13% month on month. The growth rate of coal power orders remains high, and wind power orders are growing rapidly. Among them, the clean and efficient energy equipment sector, which mainly focuses on coal and electricity, 24H1 signed new orders of 25.34 billion yuan, an increase of 21% over the previous year; corresponding to the 24Q2 new orders of 14.22 billion yuan, an increase of 14% over the previous year and 28% month-on-month. In the renewable energy equipment sector, 24H1 signed new orders of 14.06 billion yuan, up 22% year on year; 24Q2 signed new orders of 7.25 billion yuan, up 31% year on year, up 7% month on month. 24H1's new fan order exceeded 7GW, which is close to the bid capacity for the full year of 2023.

The construction of coal power projects has accelerated significantly, and the company is expected to benefit from order delivery. From January to August 2024, 22.2 GW of new coal power was approved nationwide, down 57% year on year; construction started 62.1 GW, up 29% year on year, and project construction accelerated significantly. The company is one of the main equipment manufacturers for coal-fired units in China, with a market share of about 40%.

The company has a complete energy equipment development system. It is in a leading position in the industry in various aspects such as 1000MW thermal power units and large-scale circulating fluidized bed boilers, and is expected to benefit from the delivery of new coal-fired power equipment in the future.

Risk warning: the risk of a sharp rise in raw material prices; the risk of order delivery delays or default; the risk of downstream energy project construction progress falling short of expectations; the risk of increased competition in the fan industry.

Investment advice: Considering the impact of low price coal and electricity order delivery, the company's profit forecast for 2024-2026 is lowered. The company's net profit for 2024-2026 is 3.98/4.42/3.54 billion yuan (original forecast 4.45/5.13/4.45 billion yuan), +12%/+11%/-20% year-on-year, and diluted EPS is 1.28/1.42/1.14 yuan, corresponding to the 2024-2026 dynamic PE is 11/10/12 times, maintaining “superior to the market” ratings.