Event: on January 17, 2023, the company issued the "2022 performance Forecast". The company expects to achieve a net profit of 395 million-471 million yuan in 2022, an increase of 30% to 55% over the same period last year. The company expects to achieve a net profit of 370 million-446 million yuan, an increase of 33.64% to 61.07% over the same period last year.
The traditional business has declined, and geothermal power generation has laid the foundation for growth: in the fourth quarter of 2022, the company is expected to achieve a net profit of 65 million to 141 million yuan, an increase of-12% to 90% over the same period last year. The range of the company's fourth quarter forecast is wide, but we think the company is expected to maintain growth. The third phase of the company's SMGP geothermal project in Indonesia began commercial operation in October. Although the Tmuri 11 well only opened at the end of December, the sales revenue of geothermal power generation increased by more than 75% over the same period last year, laying the foundation for growth in the fourth quarter and the whole year. Affected by the domestic economic downturn and the epidemic situation, the company's domestic air compressor business has declined significantly in both revenue and profit.
The geothermal project continued to be connected to the grid, and was slightly affected by local emergencies in the fourth quarter: the third phase of the company's SMGP geothermal project was connected to the grid in the fourth quarter, but nearly 100 villagers in the local village sought medical treatment on the grounds of nausea and headaches, resulting in the suspension of the opening operation of Tmuri 11 well, resulting in less 16~21.4MW than planned. Through the company's efforts, the company has reached an agreement with the local government. At present, the Tmur11 well has been opened and the network volume has been restored. As part of the actual grid connection in the fourth quarter is lower than the planned value, the company's operating costs have increased, which has a short-term impact on the profitability of geothermal power generation. The company's geothermal power generation equipment is highly efficient, is expected to cooperate with global customers, and will become the future growth point of the company.
The rapid growth of overseas business, waiting for the resumption of traditional domestic business: the company's overseas compressor business achieved rapid growth in 2022, the pace of global development is steady. The domestic air compressor business is greatly affected by the prosperity of the industry, but the long-term loans of domestic medium-sized enterprises have been growing rapidly for many months, the general equipment industry is expected to recover, and the company's air compressor business will also benefit from the industry recovery.
Investment suggestion: the company is a leading domestic screw air compressor enterprise, and gradually cut into the high-end compressor market, overseas business is developing rapidly, and has a leading technical advantage in the field of geothermal power generation. From 2022 to 2024, we expect the company to realize a net profit of 4.3 million RMB 680 million RMB. The corresponding PE is 37-23-18 times, maintaining the "overweight" rating.
Risk hint: the grid connection of geothermal power plants is not as expected; the recovery of domestic manufacturing is not as expected; and the expansion of overseas markets is not as expected.
