Summary of the report:
Vacuum interrupter leads the enterprise, transforming into hydrogen energy and energy storage. The company has focused on the field of vacuum interrupter for more than 50 years, and is a leader in the industry, with a market share of more than 30%. In accordance with the main business outstanding, related diversified development strategy, the company actively layout energy storage and hydrogen energy business, in which the joint venture Baoguang Zhizhong mainly energy storage frequency modulation business, market expansion is very effective. In addition, the company's gas mixing reform to introduce strategic investors has been completed, with the subsidiary hydrogen energy full license qualification advantage, hydrogen energy business is expected to expand rapidly.
Vacuum interrupter market is growing steadily, strengthening management and control to further improve efficiency and quality. The market size of vacuum interrupter is about 3 billion yuan, and it is expected to maintain a growth rate of 3-5% during the 14th five-year Plan period. The company has a deep accumulation and its gross profit margin is far better than that of its peers.
The company has strengthened lean production control and automation construction. In 2020, the quality loss rate decreased by 32% compared with the same period last year, and the periodic return rate and periodic complaint rate decreased by 66.1% and 91.8% respectively compared with the same period last year, which is expected to further improve profitability.
Join hands with Zhi Zhongyuan to lay out the energy storage and FM market. The good effect of energy storage in frequency modulation has made it widely used in major power markets around the world. the development of thermal power energy storage frequency modulation has played a positive exemplary role for new energy storage, with the improvement of new energy permeability, the way of energy storage participating in new energy frequency modulation is expected to become an important means of power frequency modulation. In 2021, the company established Baoguang Zhizhong in cooperation with Beijing Zhizhong Energy Internet Research Institute Co., Ltd., focusing on power grid energy storage auxiliary frequency modulation business and other electric energy storage applications. Zhi Zhongyuan has a strong technical background, and the company is expected to achieve significant synergy with it through the combination of technology and capital. At present, the company's business is expanding rapidly, and there are three projects on hand. With the business expansion, the company is expected to achieve a steady increase in scale.
Relying on the relevant foundation of industrial gas business, the company actively cuts into the hydrogen energy industry. Shaanxi Baoguang Precision Ceramics Co., Ltd., a subsidiary of the company, has a number of qualifications engaged in the production and sales of hydrogen and other gas business. In July 2021, the capital increase and share expansion project of precision ceramics, a wholly-owned subsidiary, signed a "capital increase agreement" with Baoji Green Development Fund and Shenzhen hydrogen Jie New Energy Enterprises. Baoguang shares, Baoji Green Development Fund and Shenzhen hydrogen Jie New Energy Enterprises will each hold 40%, 20%, 40% equity of the target company after the completion of the mixed reform. After the completion of the mixed modification, precision ceramics will be renamed Shaanxi Baoguang Lianyue hydrogen Energy Development Co., Ltd., and become the main body of Baoguang Co., Ltd., which focuses on hydrogen energy projects. The landing of this mixed modification will greatly accelerate the company's development in the field of hydrogen energy, and the subsequent hydrogen energy-related business is expected to expand rapidly.
Profit forecast: the company vacuum interrupter business chassis is robust, active layout diversification. Among them, hydrogen energy has scarce hydrogen energy license resources, with the landing of mixed changes, it is expected to quickly open the market. In addition, with the joint efforts of Baoguang Zhi, it is expected to quickly open up space in the field of energy storage and frequency modulation. It is estimated that from 2021 to 2023, the corresponding EPS of the company will be 0.17,0.29,0.36 yuan respectively, and the corresponding PE will be 77x, 45x and 36x respectively.
Risk tips: hydrogen energy and energy storage expansion is not as expected, performance forecasts and valuation judgments are not up to expectations.
