Introduction to this report:

Performance exceeded expectations, Q1 profits increased sharply, and industry sentiment was confirmed. Maintain profit forecasts, target prices, and stock growth ratings.

Key points of investment:

Maintain profit forecasts, target prices, and stock growth ratings. The net profit forecast for 2023-2025 was maintained at $128/181/260 million, and the corresponding EPS was $1.28/1.81/2.59, respectively.

Considering that the company is in a large-scale smart grid construction cycle for high-speed power line communication and continues to expand into non-grid fields, its performance grew rapidly, maintaining the target price of 59.82 yuan and the increase in holdings rating.

Performance exceeded expectations, Q1 profits increased sharply, and industry sentiment was confirmed once again. The company forecasts revenue for the first quarter +13.90% year-on-year, net profit of +52.13%-66.97% year-on-year, after deducting +103.64%-124.53% year-on-year. As the power grid market enters investment and performance is realized, the non-grid market has entered a stage of volume and recovery. At the same time, overseas markets continue to penetrate, and industry sentiment is confirmed.

High-speed dual-mode communication chips in the power grid market have passed the national grid test and are waiting for dual-mode products to be released.

In 2022, the State Grid vigorously promoted the implementation of high-speed dual-mode technology and products. The company closely followed the State Grid high-speed dual-mode standard technology route and the State Grid promotion plan. The high-speed dual-mode communication chips (LME3960) under the previous fund-raising project passed the China Grid Corporation's first batch of high-speed dual-mode chip-level interconnections in 2022, achieving a major breakthrough.

The share of revenue is expected to increase this year by vigorously deploying non-grid markets such as photovoltaics and charging stations. The company lays out intelligent management of new energy sources (such as photovoltaic power generation monitoring, etc.), comprehensive energy efficiency management (high-speed rail, park/building, etc.), smart home appliances & whole house intelligence, smart lighting (street lights/tunnel/commercial/education/home lighting, etc.), and digital management of smart power supplies (charging piles, 5G base stations, etc.), laying a solid foundation for the rapid development of the company's non-power IoT business.

Risk warning: There is a high degree of dependence on power grid companies, and the development of non-grid markets falls short of expectations.