Sinoma International Engineering Co.Ltd(600970) (600970)
Key investment points:
A global consensus on carbon neutralization has been reached, and the technical transformation and reduction replacement projects are expected to become the growth point of cement engineering business. In the international market, countries have reached a consensus on carbon neutralization. Cement owners put forward new demands for quality and efficiency improvement technologies such as ultra-low emission, alternative fuels, carbon capture and utilization, digitization and intelligence. A number of transformation and upgrading projects of old production lines will emerge in the market. In the Chinese market, under the background of “carbon peaking and carbon neutralization”, the development trend of “high-end, green and intelligent” has become the development trend of the cement industry, and the demand for quality and efficiency improvement, reduction and replacement of green intelligence and technological transformation has been continuously released. We believe that the future technological transformation and reduction replacement projects are expected to become the growth point of cement engineering business. The non power consumption direct carbon emission of the cement industry is high, and the marginal income after carbon emission reduction is higher. With the continuous maturity of China’s carbon trading system, the leading enterprises with the advantages of carbon capture technology will enjoy a premium. Compared with foreign countries, the scale of China’s carbon trading market will still expand. As an industry leader with technical advantages, the company still has growth.
Leading the intellectualization of cement plant and undertaking Huaikan South intelligent demonstration project, which is expected to be popularized in the whole industry. The company independently researched and developed digital and intelligent technologies for cement, provided customers with intelligent solutions for cement factories, and undertook the 7500t / D demonstration line project in Huaikan south. Various technical indicators have been greatly improved, reached the advanced level at home and abroad, and become the benchmark of intelligent cement in China, which is expected to be popularized in the whole industry.
The restructuring landing business was improved and the competitiveness of the main business was improved. In September 2021, Sinoma International Engineering Co.Ltd(600970) completed the transfer of 100% equity of Beijing Kaisheng, 98% equity of Nanjing Kaisheng and 100% equity of Sinoma mining. After the reorganization, Sinoma International Engineering Co.Ltd(600970) will integrate the three companies into the overall business system, expand the business scale and influence in the field of cement engineering, expand the business capacity of mining engineering and mining services, and further improve the company’s core industrial chain.
The implementation of restricted stock incentive scheme is expected to further improve the company’s operation level. It is proposed to grant 49.5 million shares to 208 directors, senior executives, core management, business and technical backbone for the first time, reserve 10 million shares, and set the performance evaluation target for 2022-2024 as the condition for lifting the sales restriction. The enthusiasm of employees is further enhanced, and the company is expected to usher in new growth.
Profit forecast and investment rating. We expect the company to realize net profit attributable to parent company of RMB 1.819 billion, RMB 2.151 billion and RMB 2.421 billion respectively from 2021 to 2023, corresponding to EPS of RMB 0.82, RMB 0.97 and RMB 1.09, and corresponding PE of 13.92x, 11.77x and 10.45x. Considering that the company has good development potential in carbon emission reduction, industrial intelligence and other fields and has leading premium value, it is given a “buy” rating for the first time.
Risk warning: the engineering business income is lower than expected; The development of equipment and environmental protection business is less than expected; The progress of the national carbon trading market is less than expected; The epidemic situation has repeatedly affected the company’s overseas business; The exchange rate fluctuates greatly; There is uncertainty in the implementation progress of this issuance; The company has goodwill impairment risk; The company is not completely comparable with foreign companies, and the relevant data are only for reference.
