Introduction to this report:

The company's 2024 three-quarter report is in line with expectations. The industrial gas business is growing steadily. Demand in the equipment sector is expected to pick up, and compressed air energy storage projects are expected to accelerate development.

Key points of investment:

Maintain an increase in holdings rating. The company's industrial gas business is growing steadily, and demand in the equipment sector is expected to pick up, maintaining the company's 2024-26 EPS of 0.64/0.72/0.83 yuan, referring to the industry's valuation of 14.28 times in 2025, giving the company 14.5 times PE in 2025, raising the target price to 10.44 yuan, and increasing the holding rating.

The company released its 2024 three-quarter report. In the first three quarters of 2024, the company achieved revenue of 7.289 billion yuan (YoY +0.28%), net profit due to mother 0.666 billion yuan (YoY -8.25%), net profit of 0.622 billion yuan (YoY -7.25%); 2024Q3 achieved revenue of 2.285 billion yuan (YoY +9.70%), net profit attributable to mother 0.208 billion yuan (YoY +5.37%), net profit of 0.188 billion yuan (YoY + 3.41%), and the performance was in line with expectations.

The industrial gas business is growing steadily, and demand in the equipment sector is expected to pick up. The energy infrastructure operation sector is growing steadily. In the first three quarters of 2024, Qinfeng Gas's revenue increased 17% year-on-year, the highest in the same period. By the end of September 2024, Qinfeng gas liquid production increased 4.39% over the same period in 2023. As domestic economic policies gradually strengthen and downstream demand picks up, gas prices are expected to rise, and Qinfeng Gas is expected to grow steadily. In the energy conversion equipment sector, the company consolidates and expands its leading global position in axial compressor and turboexpander product technology. Demand in the downstream metallurgy and chemical fields is expected to pick up, and the equipment sector is expected to develop steadily.

The compressed air energy storage market is broad, and the company's leading technology accelerates application. The company continues to develop and upgrade compressed air energy storage technology, providing the current compressor system solution with the largest capacity in the energy storage field. It has the ability to design and manufacture compressed air energy storage core equipment with different energy storage scales from medium temperature to high temperature, from small 10MW to large 660MW, and has achieved full coverage in the field of large, medium and large-scale compressed air energy storage, and has been successfully applied in 300MW compressed air energy storage projects.

Risk warning: Downstream demand for industrial gases falls short of expectations; compressed air energy storage development falls short of expectations.