Luenmei Quantum (SH:600167) GF SECURITIES·2024-05-24 03:02Investment Rating - The investment rating for the company is "Buy" with a target price of 8.00 CNY per share, indicating an expected strong performance over the next 12 months [2][4]. Core Views - The company reported a revenue of 3.41 billion CNY in 2023, a decrease of 1.1% year-on-year, and a net profit of 859 million CNY, down 9.1% year-on-year. The decline in revenue is attributed to decreases in connection fees and engineering income [1][4]. - The company has a stable heating business and is actively investing in hydrogen energy and advertising, which are expected to contribute to future growth [4][25]. - The company maintains a high cash flow, with cash on hand reaching 8 billion CNY, allowing for a high dividend payout ratio of 52.6% of net profit in 2023 [1][4]. Revenue Breakdown - The revenue is categorized into heating and steam, power generation, connection fees, engineering construction, advertising, and other businesses. The heating and steam business accounted for 82% of total revenue in 2023, with a stable growth forecast for the coming years [8][25]. - Connection fee income is expected to stabilize at 200-300 million CNY annually from 2024 to 2026, with a gross margin of 99.9% [8]. - Engineering construction revenue is projected to grow at rates of 15%, 5%, and 5% for 2024 to 2026, respectively, with a consistent gross margin of 88% [9]. - Advertising revenue is expected to increase significantly, with projected revenues of 6.73 billion CNY, 7.62 billion CNY, and 8.18 billion CNY from 2024 to 2026, respectively [31]. Profit Forecast - The company is expected to achieve net profits of 915 million CNY, 1.08 billion CNY, and 1.16 billion CNY for 2024, 2025, and 2026, respectively, reflecting growth rates of 6.5%, 17.7%, and 7.5% [10][25]. - The projected PE ratio for 2024 is 20 times, aligning with the company's stable heating business and growth in advertising and hydrogen energy sectors [4][10].