The company lays out industrial automation, network energy, new energy vehicles, photovoltaic energy storage, etc. The market share of products in different fields such as low voltage inverters, modular UPS, and electronic control of new energy commercial vehicles is among the highest in the industry. The industrial automation and network energy business is developing steadily, building a basic market. Growth businesses such as electronic control and optical storage inverters for new energy vehicles are expected to fully benefit from the high level of prosperity in the industry and build a second growth curve. The company's technical advantages are obvious. Cost reduction goes hand in hand with market development, and is expected to usher in rapid development. We expect the company's net profit to be 289/429/526 million yuan respectively for 2022/23/24, the corresponding EPS forecast is 0.37/0.55/0.67 yuan/share, respectively, and the current price corresponding to PE for 2022/23/24 is 27/18/15 times, respectively. Considering the absolute valuation method DCF valuation and the relative valuation method segmental valuation, we used the segmental valuation method to select Huichuan Technology, Megmeet, Xinjie Electric, and Raytheon Intelligence in the industrial automation industry as comparable companies, giving the company a 23x PE valuation for the company's industrial control related business in 2023. The new energy-related business selected comparable companies Imboer and Juyi Technology and gave 1x PS valuation. The total corresponding target market value was 11.4 billion yuan, the target price was 15 yuan/share, covering it for the first time, giving a “buy” rating.

INVITENG: Industrial automation leads the way, and the new energy business is starting again. The company was founded in 2002 and started with industrial automation inverters. After being listed on the Shenzhen Stock Exchange in 2010, the company expanded its business to emerging fields such as network energy, new energy vehicles, and photovoltaic energy storage. Its main products include inverters, UPS (uninterruptible power supplies), precision air conditioning for new energy vehicles, photovoltaic energy storage inverters, etc. The industrial automation and network energy business continues to develop steadily. Under the trend of automobile electrification and the explosion of photovoltaic energy storage, the company's revenue for the first three quarters of 2020 to 2022 was 22.9/30.1/2.90 billion yuan, +2%/+32%/+36% over the same period last year, achieving net profit of 1.4/18/160 million yuan. The company forecasts that Fumo's net profit for 2022 was 26-300 million yuan, an increase of 43%-65% over the previous year.

Industrial automation and network energy are growing steadily, and the new energy vehicle and optical storage industry is about to take off. Inverters are the core part of industrial automation. The Forward-looking Industry Research Institute predicts a market space of 88.3 billion yuan in 2025, a CAGR of 10.5% in 3 years, and domestic leaders Huichuan Technology and Inweiteng will promote domestic replacement; the rapid development of the digital economy will drive the demand for intelligent power supply and temperature control in data centers. The Huajing Industry Research Institute predicts UPS market space of 19.1 billion yuan in 2025 and CAGR of 12.8% in 3 years. Development towards modularity, CIDI consultants forecast the market space of precision air conditioning in 2024 to be 10.6 billion yuan in 2024 and CAGR in 3. 14.5%; The NEV electronic control sector has deeply benefited from the high boom in the industry. It has entered the market-driven stage, and the trend of electrification continues to strengthen. We expect the domestic NEV penetration rate in 2025 to be 50%, the electronic control chain market space is 128.2 billion yuan, and the 3-year CAGR will be 23.7%. The all-in-one powertrain and commercial vehicle electrification are the development trend, increasing the value and growth space of the electronic control chain; the inverter photoreceptor charger explosion is expected to grow rapidly. We expect demand for inverters to exceed 600 GW in 2025.

The cornerstone is stable, and the second growth curve has accelerated markedly. 1) Strategic layer, the company expanded its business in multiple fields based on same-source technology, completed strategic transformation and organizational optimization in 2022, accounting for more than 25% of overseas market revenue in recent years; 2) Industrial automation inverters are core products, accounting for more than 50% of total revenue. The company's low-voltage inverters accounted for 5% of the market share of domestic brands in 2021, ranking second among domestic brands, and enhanced integrated service capabilities; 3) The network energy business focused on developing UPS, with a market share of 4.8% of modular UPS in 2020, ranking third in the domestic product brand, introducing a precision air conditioning business to build intelligent power supply+temperature control and development Integrated data center to enhance profitability; 4) The company's new energy vehicle electronic control commercial vehicle market share in 2021 was first. Production capacity continued to expand, new customers such as heavy trucks were discovered, the passenger car market was expanded and orders were obtained in batches to develop multi-integrated drive assembly products with higher single value to help increase revenue; 5) Card position distributed photovoltaic and household storage circuit, photovoltaic inverters and energy storage PCS products were recognized by the market, and performance is expected to increase based on cost reduction and overseas market promotion.

Risk factors: The electrification process of commercial vehicles fell short of expectations; the risk of price increases for upstream raw materials; the risk that the overseas situation and policies would change beyond expectations; the increase in the company's product market share fell short of expectations; the company's market expansion progress fell short of expectations; and the release of production capacity fell short of expectations.

Investment advice: The company lays out industrial automation, network energy, new energy vehicles, photovoltaic energy storage and other fields. The market share of products in different fields such as low voltage inverters, modular UPS, and electronic control of new energy commercial vehicles is among the highest in the industry. The industrial automation and network energy business is developing steadily, building a basic market. Growth businesses such as electronic control and optical storage inverters for new energy vehicles are expected to fully benefit from the high level of prosperity in the industry and build a second growth curve.

The company's technical advantages are obvious. Cost reduction goes hand in hand with market development, and is expected to usher in rapid development. We expect the company's net profit to the parent for 2022/23/24 to be 289/429/526 million yuan respectively, the corresponding EPS forecast is 0.37/0.55/0.67 yuan/0.67 yuan/share, respectively, and the current price corresponding to 2022/23/24 PE is 27/18/15 times respectively. Considering the absolute valuation method DCF valuation and the relative valuation method segmental valuation, we used the segmental valuation method to give the company a 2023 industrial control related business 23x PE valuation and a 1x PS valuation for the new energy related business. The total corresponding target market value of 11.4 billion yuan and the target price of 15 yuan/share was covered for the first time, giving a “buy” rating.