Core views:

The company released its 2024 semi-annual report. According to financial reports, 24H1, the company achieved revenue of 2.93 billion yuan, +23% year over year, and back 0.037 billion yuan, or -38% year over year. Of these, 24Q2 achieved revenue of 1.66 billion yuan, +12% year over year, and 0.134 billion yuan to mother, or -21% year over year. The performance was in line with expectations.

The fee rate declined during the period, and new signings continued to increase. 24H1, with an expense ratio of 8.2%, of which the sales/management/finance expense ratios were 1.1%/7.0%/0.01%, respectively, -0.1/-0.9/-0.02pct year over year; net operating cash flow outflow was 1.22 billion yuan/higher outflow of 0.41 billion yuan year over year. 24H1 signed a new contract amount of 7.32 billion yuan/year over year +80%; of these, Q2 signed 3.71 billion yuan/year over year +33%.

Revenue from material transportation engineering and thermal energy increased. High-end steel structure revenue 1.07 billion yuan/year over year +2%, gross profit margin 15.1% /year over year +0.4 pct. Material handling engineering revenue was 0.73 billion yuan/year over year +29%, gross profit margin 15.2% /year over year -7.1 pct. Offshore engineering revenue was 0.29 billion yuan/year over year +58%, gross profit margin -3.9% /year over year -11.9pct. Thermal energy engineering revenue was 0.81 billion yuan/year over year +100%, gross profit margin was 11.8% /year over year - 6.2 pct. Hydrogen energy engineering revenue was 0.03 billion yuan/-82% year over year, and gross profit margin was 80% /year over year +64.3 pct.

It is proposed to change the name to “Huadian Science and Engineering” to combine production and research to catalyze business growth. An announcement was issued on August 19. The board of directors deliberated and approved the intention to change the full Chinese name of the company from “Huadian Heavy Industries Co., Ltd.” to “Huadian Technology & Engineering Co., Ltd.” Continue to expand the offshore business landscape: carry out research on marine energy such as floating offshore wind power, marine ranching, offshore photovoltaics, wave energy, and tidal energy.

Laying out the “hydrogen use” industry chain: Applied research and project demonstrations in cooperation with Beijing University of Posts and Telecommunications and the Beijing Institute of Post and Telecommunications Research to develop hydrogen energy power supply systems for 5G base stations and scenarios such as drones.

Profit forecast and investment advice: Material transportation projects and thermal energy projects are expected to continue to benefit under the high downstream boom, and the profitability of marine engineering is expected to improve in the context of falling fixed leasing costs. The company's net profit for 24-26 is estimated to be 0.267/0.337/0.411 billion yuan, respectively. The judgment of a reasonable value of 5.63 yuan/share remains unchanged, and the “buy” rating is maintained.

Risk warning: Downstream investment is slowing down, hydrogen energy promotion falls short of expectations, and the profitability of new businesses is declining.