The company's performance in 2020 exceeded expectations, and its excellent cost control ability promoted the continuous improvement of profitability; at present, the company is full of orders, and the revenue structure continues to be optimized, the speed of energy change under the background of "double carbon" is accelerating, and the demand for nuclear power, wind power and other fields is improving. I am optimistic about the steady growth of the company as a domestic comprehensive energy leader. We believe that 25 times PE in 2021 can be regarded as a reasonable valuation of the company's A shares, corresponding to the target price of 16.25 yuan, maintaining the "buy" rating, bullish on the contraction of the valuation discount of Hong Kong stocks, giving the company's Hong Kong shares 20 times PE in 2021 as a reasonable valuation, corresponding to the target price of HK $10.99, maintaining the "buy" rating.
The performance exceeds the expected growth, and the profitability continues to improve. The company announced that it realized operating income of 37.283 billion yuan (+ 13.53% yoy), net profit of 1.862 billion yuan (+ 45.73% yoy), deducted non-parent net profit of 1.529 billion yuan) (+ 44.51% yoy), company performance exceeded expectations, of which 20Q4 realized operating income of 9.943 billion yuan (+ 0.93% yoy,+9.56% qoq), net profit of 520 million yuan (+ 114.88% yoy,+34.02% qoq). During the reporting period, the company's gross profit margin fell slightly to 20.35%, but thanks to excellent cost control during the epidemic, the company's net profit margin increased to 5.29% and ROE (diluted) increased to 6.02%.
The business structure has been rebalanced, and the income of wind power and environmental protection has grown rapidly. From a sub-sector point of view, except for the decline in clean and efficient energy equipment revenue from the same period last year (11.152 billion yuan,-28.10% yoy),), the company's other sectors have achieved different levels of growth. Among them, renewable energy equipment (10.085 billion yuan, + 70.32% yoy) and emerging growth industries (6.296 billion yuan, + 103.06% yoy) have increased significantly, and have become the second and third largest revenue contributors of the company; the main driving force behind the growth comes from wind power product revenue, which increased by 108.71% year-on-year, and environmental protection product income, which increased by 240.88% year-on-year. The company's income structure continues to be balanced and optimized. As a leading comprehensive energy equipment supplier in China, the change of its income structure also shows the direction of China's energy system reform to a certain extent.
The order structure indicates the future development direction of the company. In 2020, the company realized a total of 49.4 billion yuan in new orders (+ 23.1% yoy),. By the end of 2020, the size of the company's existing orders was 84.5 billion yuan. Based on the revenue in 2020, the order coverage rate was about 227%. The growth momentum is sufficient. At the same time, dismantling the newly effective order structure, the proportion of efficient clean energy equipment / renewable energy equipment / engineering and trade / modern manufacturing services / emerging growth industries is 32.4%, 13.9%, 13.4%, 16.1%, 14.3%, respectively. From the structural trend, it is expected that the company's revenue structure will continue to maintain a balanced development trend. The future transformation and development direction represented by renewable, modern manufacturing services and emerging growth industries is expected to gradually become the driving force for the company's follow-up development during the 14th five-year Plan period; looking forward to 2021, the steady progress of nuclear power and the sustainable construction of wind power, superimposed power plant services, overseas demand recovery and emerging business cultivation are expected to promote the steady development of the company in many fields.
Risk factors: the target of "double carbon" falls short of expectations, power investment fluctuates, thermal power installation is reduced on a large scale, nuclear power construction slows, competition in the wind power market intensifies, raw material prices rise sharply, and overseas markets do not advance as expected.
Investment suggestion: according to the fullness of the company's on-hand orders and the improvement of the downstream boom, we raise the company's profit forecast. It is estimated that the annual EPS in 2021-22-23 will be 0.65 yuan 0.74 won 0.83 yuan (the original forecast is 0.59 yuan for 22 years, and the new 2023 forecast value is 0.61 yuan), corresponding to the 19-17-15 times of PE. Under the goal of "double carbon", the company, as the equipment leader in China's comprehensive energy field, is expected to benefit from the general trend of energy reform and continue to grow steadily; combined with the valuation level of the company in the stage of large-scale energy construction in history, give the company 25 times PE in 2021 as a reasonable valuation, corresponding to the target price of 16.25 yuan, and maintain the "buy" rating. It is optimistic that the change in energy demand will push the company's Hong Kong stock valuation to shrink relative to the A-share discount, giving the company's Hong Kong stock 20 times PE in 2021 as a reasonable valuation, corresponding to the target price of HK $10.99 and maintaining a "buy" rating.