Shanghai Bloom Technology (SH:603325) Southwest Securities·2024-08-28 06:00Investment Rating - The report maintains a "Buy" rating for the company with a target price of 80.55 CNY over the next six months [1][7]. Core Insights - The company's performance in the first half of 2024 was impacted by project delivery schedules, resulting in a revenue decline of 34.9% year-on-year to 370 million CNY and a net profit drop of 25.9% to 100 million CNY [2][6]. - Despite the short-term challenges, the company reported a significant recovery in Q2 2024, with a revenue increase of 69.3% year-on-year and a net profit surge of 267.3% year-on-year [2][6]. - The company has a record high order backlog of 4.92 billion CNY, which is expected to support revenue growth over the next two to three years [2][6]. - The company is well-positioned to benefit from the upcoming equipment renewal cycle in the petrochemical sector, as outlined in government initiatives [2][6]. Summary by Sections Financial Performance - In H1 2024, the company achieved a gross margin of 30.1%, a slight decrease of 1.5 percentage points year-on-year, while the net margin improved to 26.8%, an increase of 3.2 percentage points year-on-year [2][6]. - The company’s operating expenses were well-controlled, maintaining a low expense ratio of 6.7% [2][6]. Order Backlog and Market Position - The company has strengthened its market position in the petrochemical and chemical industries, with a diverse customer base and increasing international project participation [2][6]. - The order conversion cycle is estimated at 2-3 years, providing a solid foundation for future revenue growth [2][6]. Earnings Forecast - The company is projected to achieve net profits of 360 million CNY, 460 million CNY, and 530 million CNY for 2024, 2025, and 2026, respectively, with a compound annual growth rate of 22.8% [3][7]. - The expected earnings per share (EPS) for the same period are 5.37 CNY, 6.85 CNY, and 7.98 CNY [3][7].