2022-01-10 CNAC Securities Zou Runfang, Zhu Zuyue, Sun Yuhao and Tang Baowei conducted research on Xue Dilong and released a research report that "dual control of carbon emissions is expected to boost the demand for carbon monitoring market and be optimistic about the company's long-term development." this report gives a buy rating to Xue Dilong, the current share price is 8.76 yuan.

Xue Dillon (002658)
Deep ploughing in the field of environmental monitoring for 20 years, striving to be an expert in environmental quality improvement solutions
Beijing Xuedilong Technology Co., Ltd. is a high-tech enterprise specializing in environmental monitoring, industrial process analysis, environmental big data, pollution control and energy saving, and environmental comprehensive services. The company is one of the pioneers in the domestic environmental monitoring and analytical instrument market, with nearly 20 years of technical reserve, product research and development, industry application and other relevant experience in the field of environmental monitoring, as well as mature technical, sales and service teams. The company is positioned as an expert in environmental quality improvement solutions, and contributes to the improvement of environmental quality standards and the realization of the goal of "carbon peak and carbon neutralization" by providing a comprehensive solution of "pollution reduction and carbon reduction synergy" and "continuous improvement of environmental quality". In 2020, the company achieved revenue of 1.213 billion yuan,-2.45% compared with the same period last year, and net profit of 150 million yuan, + 6.95% compared with the same period last year. In the first three quarters of 2021, the company achieved revenue of 879 million yuan, + 30.37% compared with the same period last year, and net profit of 159 million yuan, + 159.71% compared with the same period last year.
From carbon verification to real-time online monitoring, carbon monitoring system has gradually gained policy support.
At present, carbon emissions accounting rules mainly include enterprise greenhouse gas accounting methods and reporting guidelines issued by the National Development and Reform Commission, carbon dioxide accounting and reporting guidelines issued by prefectural and municipal development and reform commissions, greenhouse gas emissions accounting and reporting guidelines, and so on. The carbon dioxide emissions of enterprises are calculated. For example, in the Beijing standard, the carbon dioxide emissions generated by fossil fuel combustion in the power generation industry = ∑ = 1 (×), where (GJ) is the activity data of the first fossil fuel in the accounting and reporting year, (tCO2/GJ) is the carbon dioxide emission factor of the first fossil fuel, and I is the code name of the fossil fuel type. When calculating the carbon emissions of chemical and petrochemical enterprises in the industrial production process, it is necessary for enterprises to provide self-measured values such as the purity or carbon content of some carbon-containing raw materials and carbon-containing products as emission factors.
However, when reporting and verifying carbon emissions, the complex technological processes of different enterprises, massive basic data and changing accounting boundaries all bring many problems to this work. At present, many verification agencies have different understandings and interpretations of the same enterprise in the application of the same guidelines. Some verification agencies will have a broad understanding of the guidelines, while others will have a relatively detailed understanding, and these differences will lead to inconsistencies in the calculation of companies' carbon emissions.
Real-time online monitoring of carbon emissions is expected to solve various problems in carbon verification. According to the China carbon Monitoring working Group, the relationship between carbon accounting and carbon monitoring is simply put. The former mainly calculates greenhouse gas emissions based on the product of activity levels and emission factors. The latter calculates greenhouse gas emissions based on atmospheric greenhouse gas concentration monitoring data and assimilation inversion model. Monitoring can promote the improvement of the accounting system, support the localization and updating of emission factors, and check the accounting results.
At the end of 2020, the first technical standard for on-line monitoring of carbon dioxide emissions from thermal power enterprises was officially released, and the national carbon market was officially traded in mid-July 2021, which put forward higher requirements for the accuracy of carbon emissions accounting. In September 2021, the Ministry of Ecology and Environment issued the pilot work Plan for carbon Monitoring and Assessment (hereinafter referred to as "the Program"), which deployed the pilot work of carbon monitoring and assessment, which was carried out around five key industries, such as thermal power and iron and steel. Sixteen cities, including Tangshan and Taiyuan, were shortlisted as pilot cities. In December 2021, the Central Economic work Conference guided the correct understanding and grasp of carbon peak carbon neutralization, so as to create conditions to realize the transformation from "double control" of energy consumption to "double control" of total carbon emission and intensity as soon as possible. We believe that the policy orientation of carbon monitoring is obvious, and the market demand for carbon monitoring is expected to be boosted.
The environmental integrated service provider with the influence of the industry, with outstanding performance in policy addition, is expected to usher in Davis' double-click.
The company deeply ploughs the environmental monitoring industry, and after years of efforts, it has gradually developed from an environmental monitoring equipment provider to an environmental integrated service provider, and has a high influence in the industry. At present, the company has participated in the pilot monitoring of CO2 emissions from some thermal power enterprises, and is also participating in the compilation of the standard "Technical requirements for on-line Monitoring of carbon dioxide emissions from Building Materials Industry" by the Ministry of Industry and Information Technology, and at the same time, the company has provided some environmental monitoring equipment for air quality monitoring and guarantee during the Beijing Winter Olympic Games. The company's net profit in the first three quarters was 159 million yuan, + 159.71% compared with the same period last year; the net interest rate was 17.99%, + 8.99 pct; at the same time, the company's inventory and contract liabilities were at a high level in recent years, with contract liabilities of 347 million yuan, + 8% year-on-year and + 19% compared with the same period last year. Continued growth in follow-up performance is guaranteed. At present, the company's rolling PE is 22, and the market expectation PE for 2021 is 33 (Wonder consensus forecast). The company's annual results may exceed market expectations. Policy overlay outstanding performance, the company is expected to usher in Davis double-click.
Investment suggestion
It is estimated that the return net profit of the company in 2022 and 2023 is 249 million yuan and 327 million yuan respectively, corresponding to the current PE of 22X/17X, which is optimistic about the long-term development of the company.
Risk hint
Macroeconomic downturn, market demand decline; raw material prices fluctuate sharply; carbon monitoring policy is less than expected.

According to the Securities Star valuation analysis tool, Cedillon (002658) has a rating of 2.5 stars for good companies, 3 stars for good prices, and 2.5 stars for comprehensive valuations. (rating range: 1-5 stars, up to 5 stars)