Net profit in 2019 surged 52.2% YoY to RMB109 mn. Revenue in 2019 wasdown 13.0% YoY while net earnings increased YoY by 52.2%. Both revenueand net earnings in 2019 beat expectation. Accounting for more than 60% oftotal revenue in 2019, sales of thermal equipment and power plantengineering services went down YoY by 29.7% and 26.4%, respectively.Consolidated gross margin went up YoY by 2.4 ppt to 14.9% in 2019 as aresult margin recovery in most business segments. New contracts signedduring the period reached RMB30.19 bn, down YoY by 10.5%. Overseas neworders contributed RMB12.652 bn during 2019, down YoY by 11.8%.
Power engineering investment in 2M2020 went down YoY by 10.7% toRMB21.7 bn. In 2M2020, thermal, hydro and nuclear investment went downYoY by 22.7%, 40.9% and 39.6%, while that of wind power investmentjumped YoY by 142.4%. It is worth noting that wind power engineeringinvestment surged 82.4% YoY in 2019 to hit RMB117.1 bn. As the domesticwind installation rush is to continue in 2020, we expect domestic wind powerinvestment to break the RMB100 bn milestone again in 2020, with newlyinstalled wind capacity of at least 30 GW in 2020.
We maintain the "Accumulate" investment rating and our TP to HK$2.70.With margin recovery underway despite expected decline in sales, ouradjusted EPS forecasts from FY20 to FY22 are RMB0.191, RMB0.266 andRMB0.343, respectively. Our TP translates to 12.6x/ 9.0x/ 7.0x 2020-2022PER or 0.3x/ 0.2x/ 0.2x 2020-2022 PBR, respectively.