Event description
Zhejiang Fu Holdings released its mid-2023 report, with revenue of 9.35 billion yuan in the first half of the year, YoY + 19.9%, net profit of 748 million yuan, YoY + 13.9%, and non-performance of 511 million yuan, YoY-12.2%. Among them, Q2 single-quarter revenue of 4.71 billion yuan, YoY+17.8%; return net profit of 254 million yuan, YoY+0.70%; deducted non-performance of 254 million yuan, YoY+ 37.7%.
Event comment
2023H1's steady revenue growth, home and deduction performance growth and income growth differences are mainly affected by gross margin, investment income, fair value changes and asset impairment and other subjects. 1) the revenue is + 19.9% compared with the same period last year, mainly due to the contribution of growth momentum from the hazardous waste sector, the improvement of project capacity utilization and the increase of production and sales volume, and its revenue is + 21.4% compared with the same period last year, accounting for 95.7%. 2) the company's net profit deducted from non-return decreased by 12.2%. First, the gross profit margin decreased by 2.76pct to 14.4% compared with the same period last year, which is speculated that the proportion of income from resource-based products with low gross margin increased; second, the fair value change loss was 115 million yuan, mainly due to a hedging loss of 120 million yuan, compared with 7.748 million yuan in the same period last year. Third, the provision of asset impairment of 173 million yuan, mainly due to the provision of inventory decline and contract performance cost impairment loss of 168 million yuan, speculated that the main product nickel and other metal prices 2023H1 showed a downward trend. 3) the net profit of homing increased by 13.9% compared with the same period last year, mainly due to the profit and loss of fair value changes arising from the holding of transactional financial assets and transactional financial liabilities, in addition to the effective hedging business related to the normal business of the company. And the total investment income from the disposal of transactional financial assets, transactional financial liabilities and available-for-sale financial assets totaled 167 million yuan, which thickened the profits.
During the period of 2023H1, the expense rate decreased and the net cash flow of operating activities increased. During the period of the company, the expense rate was 7.29%, which was reduced by 0.65pct compared with the same period last year, in which the financial expense rate was reduced by 0.36pct to 0.76%, and the management expense rate was reduced by 0.38pct to 2.38%.
The net cash flow of operating activities was 328 million yuan, compared with 38 million yuan in the same period last year, mainly due to an increase in the net income and expenditure of sales rebates and hedging deposits received. The final asset-liability ratio of 2023H1 is 50.9%, a month-on-month drop of 5.07pct.
With the vigorous development of pumped storage and the accelerated construction of nuclear power, the company's orders welcome a new round of growth. 1) pumped storage: the company has signed cooperation agreements with large power groups such as China Resources and Huaneng, as well as private enterprises with resources such as Wanliyang (Jiangshan pumped Storage); 15 sets of annual hydropower equipment capacity are under construction in Tonglu, Zhejiang, and in January 2023, the company has coordinated with the Yichang government and the three Gorges Group to promote the construction of 10 sets of annual hydropower equipment capacity in Yichang City. (2) Nuclear power: the company has outstanding R & D capability in the nuclear power field. Huadu is one of the main designers and manufacturers of control rod drive mechanism for nuclear primary equipment of nuclear reactor in China. The leading 600MW fourth-generation commercial fast reactor liquid metal nuclear main pump engineering prototype has been successfully trial-run, the company is under construction to produce 7 sets (sets) of nuclear power equipment project, and signed a 1.026 billion yuan control rod drive mechanism (CRDM) equipment supply contract in March 2023. In the context of the national approval of the construction of six nuclear power units, the company's nuclear power business is expected to open room for follow-up growth.
Profit forecast and valuation: the company has a hazardous waste production capacity of 1.75 million tons and is under construction of 970000 tons. Clean energy equipment is expected to benefit from the industry dividends of pumped storage and nuclear power. It is estimated that the company's return net profit from 2023 to 2025 is 16.6 yuan 18.8 yuan / 2.25 billion yuan respectively, compared with the same period last year, + 13.2% Universe 13.0% Universe 19.7%, corresponding to PE valuation 13.0x/11.5x/9.59x. Maintain the "overweight" rating.
Risk hint
1, metal price fluctuation risk; 2, policy risk.