Events:

The company released a report for the third quarter of 2023, with revenue of 397 million yuan in the third quarter, an increase of 37.67% over the same period last year. The non-return net profit was 45 million yuan, an increase of 48.65% over the same period last year. In the first three quarters of 2023, the company achieved revenue of 1.168 billion, an increase of 44.67% over the same period last year, deducting 134 million of non-return net profit, an increase of 57.79% over the same period last year.

Core ideas:

Orders on hand are sufficient to ensure performance growth, and the slight decline in gross margin is mainly due to an increase in some high-end raw materials, which is expected to be repaired gradually with economies of scale. As of the end of the third quarter, the company's net operating cash flow was negative 73.29 million and 70.18 million at the beginning of the year, which was mainly affected by the increase in newly signed orders of the company. The upstream of the company is mainly steel enterprises with a short payment cycle, while downstream is a chemical enterprise with a long payment cycle, resulting in a positive to negative operating cash flow. In the later stage, with the increase of product shipments and profits, it is expected that the operating cash flow will be repaired. The gross profit margin of 22.93% is lower than that of the same period last year, mainly due to the increase in the price of raw materials in the process of increasing the added value of the products. Although the gross profit margin has decreased, the net profit has increased, followed by an increase in sales of high value-added products. Gross profit margin is expected to gradually recover. By the end of June 23, the order on hand was 2.1 billion yuan, of which new energy accounted for more than 30%, natural gas chemical industry accounted for more than 30%, petroleum refining accounted for more than 20%, and the order was sufficient.

The benefits at home and abroad are superimposed, and the income of oil refining and natural gas equipment has been increased. Domestically, the company's oil skid-mounted device has won a total of more than 100 million since the beginning of this year, and the company has recently won the bid for skid-mounted core equipment in Chuanxi marine high-sulfur gas field, which continues to provide a strong guarantee for the exploitation and treatment of China Petroleum & Chemical Corp's high-sulfur natural gas. We expect this area to support the company's performance development in the later period. Internationally, with the end of the epidemic and the development of the "Belt and Road Initiative" economic belt, the company has further deepened its cooperation with customers along the "Belt and Road Initiative" route and Russian-speaking areas. in the first half of the year, export business revenue increased by more than 90% over the same period last year. Later, it is expected that with the further development of "Belt and Road Initiative", the contribution of overseas markets to the company's performance growth will increase.

The installed capacity of nuclear power is increasing year by year, and the market prospect of new fuel transport containers is broad. Although affected by the technical transformation of Zhongguang's new fuel transport containers, the company's output of new fuel transport containers this year is slightly lower than that of last year, but the installed capacity and generating capacity of nuclear power have increased year by year. the trend of increasing demand for new fuel remains unchanged. In 2022, the State Council approved 10 nuclear power plants to be installed, the largest number since 2008. By the end of September 2023, the State Council approved the installation of 6 units. It is estimated that the approved number will reach 810 units in the whole year, and the installed capacity of nuclear power in China will reach 70 million kilowatts during the 14th five-year Plan period, and there is a broad market space in the future. The company's batch production of ANT-12A new fuel transport containers has completely entered the normalization, and has made cooperation with domestic leading enterprises, and the company has broad market prospects for domestic replacement of new fuel transport containers in the future.

Spent fuel reprocessing long slope thick snow, optimistic about the market space of spent fuel transport containers in the future. With the bidding of the new phase of spent fuel reprocessing industrial demonstration field, it is expected that China's spent fuel reprocessing capacity will be further improved in the next few years, and the demand for spent fuel transportation will increase. The company participates in the national regulations and standards related to the design and manufacture of spent fuel transport containers, and its own spent fuel transport containers are also under development, which is expected to become a new momentum for the company's performance growth in the future.

Cut into the hydrogen track to open up new profit growth points. The company raised money to cut into the hydrogen race track at the end of 2022 and in the first half of 2023. According to the 2022 hydrogen Energy Industry Research report, it is estimated that the annual demand for hydrogen in China will increase to 37.15 million tons in 2030, accounting for about 5% of the terminal energy consumption. By 2060, the annual demand for hydrogen in China will increase to about 130 million tons, accounting for about 20% of the terminal energy consumption. From 2020 to 2025, the output value of China's hydrogen energy industry will reach 1 trillion yuan, and from 2026 to 2035, the output value is expected to reach 5 trillion yuan. The company plans to be in the hydrogen production, hydrogen storage and hydrogenation racetrack. In the future, with the release of hydrogen energy value, the company will usher in a new performance growth point.

The expansion capacity of the fund-raising project will gradually reach production capacity, providing support for subsequent performance growth. In 2022, the company invested 580 million yuan in intelligent manufacturing of high-end process equipment and other projects to solve the problem of capacity bottleneck. According to the company announcement, the expansion of the first phase of the plant is expected to be completed in the fourth quarter of this year. With the gradual arrival of the new production capacity, it will provide a strong guarantee for the company's long-term development in the next 3-4 years.

Profit forecast and investment suggestions: from 2023 to 2025, the company is expected to achieve a return net profit of 182 million, 255 million, 322 million, corresponding to EPS 0.67,0.93,1.18 yuan, corresponding to PE is 19 times, 13 times, 11 times, currently maintaining the "recommended" rating.

Risk hints: the risk of high customer concentration; the risk of macroeconomic changes; the risk of changes in raw material prices; the risk of tight liquidity