Core views

The company released its 2024 three-quarter report. In the third quarter, the company achieved operating income of 14.392 billion yuan, a year-on-year decrease of 3.09%, a year-on-year decrease of 22.23%, and realized a net profit of 0.933 billion yuan, an increase of 2.60% year-on-year and an increase of 18.78% month-on-month, and realized net profit without return to mother of 0.835 billion yuan, a year-on-year decrease of 4.07% and a year-on-month increase of 44.20%. Q3 The company's gross profit margin and net profit margin clearly rebounded from Q2, and net profit to mother resumed growth. Previously, the impact of low gross margin order delivery such as thermal power was gradually eliminated in Q3. At the end of the third quarter, the company's inventory increased sharply, mainly due to the expansion of production scale; new orders in the Q3 quarter increased 64% year-on-year.

occurrences

The company released its three-quarter report for 2024. In the first three quarters of 2024, the company achieved operating income of 47.849 billion yuan, a year-on-year increase of 6.89%, realized net profit to mother of 2.625 billion yuan, a year-on-year decrease of 9.86%, and realized net profit deducted from non-mother of 2.469 billion yuan, a year-on-year decrease of 8.19%.

In the third quarter of 2024, the company achieved operating income of 14.392 billion yuan, a year-on-year decrease of 3.09%, a year-on-year decrease of 22.23%, and realized net profit of 0.933 billion yuan, an increase of 2.60% year-on-year and an increase of 18.78% month-on-month. Net profit without return to mother was 0.835 billion yuan, a year-on-year decrease of 4.07% and a year-on-month increase of 44.20%.

Brief review

Profit: In the third quarter of 2024, the company achieved revenue of 14.392 billion yuan, a year-on-year decrease of 3.09% and a year-on-month decrease of 22.23%. The company's profitability increased in the third quarter, and net profit to mother resumed growth. There has been a marked recovery compared to the second quarter. The decline in the company's Q2 performance was mainly due to the delivery of low-cost coal and electricity orders. In addition, the decline in gross margin of wind power and engineering contracts also had a significant negative impact; the impact above Q3 was gradually eliminated, and net profit and profitability returned to mother improved markedly.

Gross profit margin: The Q3 company's gross profit margin was 16.63%, up 4 pct from month to month, down 0.72 pct year on year, net profit margin 6.8%, up 2.26 pct from month to month, up 0.3 pct year on year. There has been a marked recovery from the second quarter.

Period expenses: The company's expenses rate for the third quarter was 11.7%, an increase of 2.2 pct over the previous month, but the absolute amount of expenses for the period decreased month-on-month. The increase in the cost ratio was mainly affected by the small amount of revenue confirmed by the company in the third quarter.

Inventory: The company's inventory increased sharply at the end of the third quarter. By the end of September, the company's inventory was 22.26 billion yuan, an increase of 33% over the end of the second quarter, reaching a high in recent years, mainly due to the expansion of production scale. As of the end of September, the company's contract debt was 38.9 billion yuan, an increase of 9.6% over the previous month. It is expected to increase due to the increase in the company's order volume.

Orders: In the third quarter, the company added 25.2 billion yuan in orders, up 64% year on year and down 15% month on month. In the first three quarters of 2024, the company added effective orders of 81.251 billion yuan, an increase of 27% over the previous year, with clean and efficient energy equipment accounting for 40.33%, renewable energy equipment accounting for 27.05%, engineering and trade accounting for 10.99%, modern manufacturing services accounting for 8.54%, and emerging growth industries accounting for 13.10%.

Profit forecast and valuation: We expect the company's revenue for 2024-2026 to be 68.99, 73.17, and 76.78 billion yuan, respectively, and the estimated net profit to mother will be 3.61, 4.55, and 5.22 billion yuan, respectively. The corresponding PE is 14.0, 11.1, and 9.7 times, respectively.

Risk analysis

The amount of completed investment in power infrastructure falls short of expectations: the company's main power equipment, performance is highly correlated with investment in wind power, gas power, thermal power, hydropower, and nuclear power. If the completed amount of power investment falls short of expectations, it will affect the company's performance; upstream raw material prices fluctuate greatly: price fluctuations such as upstream steel will affect the company's performance; downstream electricity demand falls short of expectations: power investment is related to electricity demand. If electricity demand is weak, it will affect investment in new power sources, which in turn affects the company's performance; production expansion progress falls short of expectations: some of the company's production capacity is still insufficient, If production expansion falls short of expectations, it will affect the company externally Sales volume; revenue recognition falls short of expectations: Failure to confirm revenue as expected will result in performance falling short of expectations. Among them, thermal power accounts for the largest share of the company's gross profit. Changes in thermal power revenue recognition have a great impact on the company's net profit. If there is a discrepancy in thermal power sales revenue, it will have an impact on profit forecasts.