Xizi Jieneng ( Hangzhou Boiler Group Co.Ltd(002534) )
Key investment points
Waste heat boiler faucet, molten salt energy storage to create a new growth pole, and the ability to get orders continues to increase
The company is the largest and most complete waste heat boiler leader in China, providing customers with energy-saving and environmental protection equipment and overall solutions for energy utilization, and actively entering the molten salt energy storage market. In 2021, the company’s operating revenue and net profit attributable to the parent company were 6.58 billion yuan and 420 million yuan respectively, with a year-on-year increase of 23% and – 18% respectively, and the revenue CAGR in recent five years reached 17%. In 2021, the company added a total of 9.04 billion yuan of new orders (a year-on-year increase of 45%), and 7.14 billion yuan of orders were on hand at the end of the year, with full orders and promising development.
Waste heat boiler: Huawei management reform helps improve the quantity and quality of orders
Waste heat recovery has significantly reduced carbon emissions, and the State Council has issued many policies to support the development of waste heat industry. We estimate that the market space CAGR of power station waste heat boiler from 2021 to 2030 is 6%; With the recovery of capital expenditure and stock upgrading of downstream industries, industrial waste heat boilers have entered the business cycle, and the demand is expected to continue to grow.
Since 2019, the company has introduced the handed down wisdom team and learned from Huawei’s management mode to form the business philosophy of “customer-centered and striver oriented”. In 2020 and 2021, the revenue growth of waste heat boiler business reached 39% and 19% respectively, and the market share increased rapidly.
Molten salt energy storage: three major applications have spawned a 100 billion market, and the first order of “zero carbon Park” has landed
Molten salt energy storage is the third largest energy storage mode in the world, accounting for 1.6% of the global energy storage market. The flexibility transformation of thermal power units, the integration of photovoltaic light and heat energy storage and zero carbon smart energy center are the three main applications of molten salt energy storage, among which the flexibility transformation of thermal power units has a market space of more than 100 billion.
The company plans to acquire 51% equity of HEPP energy, the leader of molten salt energy storage system integration, and Lanjie energy, the leader of electrode boiler manufacturing, respectively, complement the advantages of the company’s boiler technology and solution capabilities, and enter the 100 billion market of molten salt energy storage.
In March 2022, the “green electric molten salt energy storage demonstration project” with a value of 190 million yuan landed. It is the first green Zero Carbon Industrial Park project built by the company after the zero carbon smart energy plant of Xizi airlines. The business logic has been recognized by the market and is expected to be copied quickly in the future.
Profit forecast and valuation
As a supplier of overall solutions for energy utilization, the company has a first mover advantage in the field of commercialization of molten salt energy storage and strong certainty of performance growth. It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be RMB 550 / 74 / 810 million, with a year-on-year increase of 30% / 35% / 10%, corresponding to pe19 / 14 / 13 times. For the first time, give a “buy” rating.
Risk tips
Price fluctuation risk of raw materials; Risk of new business orders falling short of expectations; Risk of intensified market competition
