Investment points: Investment rating and valuation: The company's large-scale high-voltage inverters lead technology, and the power electronics and components business is expected to become a driving force for performance growth. We expect the company's operating income for 11-13 to be 15.7/20.6/2.67 billion yuan, EPS is 0.57/0.78/1.03 yuan, and the compound net profit growth rate will reach 35%. Furthermore, the company may overraise 1 billion dollars in mergers and acquisitions, and performance is expected to exceed expectations. The current stock price corresponding to PE is 26, 19, and 15 times, maintaining the “buy” rating. It is different from the public's perception: (1) The market believes that the company is a traditional complete switch manufacturer, and the power electronics technology is average. We believe that the company's power electronics products are technologically advanced, and that the company's large-scale high-voltage inverters used in the field of oil and gas pipeline transportation are expected to be replaced by imports in the future, with an average annual market size exceeding 2 billion yuan. The company has developed the world's leading 25MVA large high voltage inverter, which passed the certification of the National Energy Administration in January, and will be used in high-end fields such as oil and gas pipeline transportation in the future. According to estimates, the average annual market for high-end inverters in the domestic oil and gas sector exceeds 2 billion yuan. Currently, it mainly imports foreign brands such as ABB and Siemens, and the company is expected to replace imports in the future. (2) The market believes that the company's future growth potential is insufficient. We believe that the market size of high-end low-voltage components is as high as 20 billion yuan, with gross margin reaching 50%-60%, which will become the driving force for the company's performance growth in the future. High-end low-voltage components have high technical barriers. Currently, they are mainly dominated by foreign brands such as Schneider and ABB, with annual domestic market sales reaching 20 billion dollars. The company and GE set up a joint venture to use GE's latest low-voltage component technology. The product will be localized by the end of the year, sales will be achieved next year, and it will become a driving force for performance growth in the future. (3) The market may think that the performance of switchgear companies fluctuates greatly; we believe that the gross margin of switchgear distribution equipment is stable, the market size is large, and the continued growth of future performance is guaranteed. At present, about 70% of the company's profit comes from complete switchgear. As a power distribution device, the gross margin is stable; at the same time, the market size is growing as the installed capacity of electricity continues to grow. It is estimated that the current market size of the complete switchgear may exceed 100 billion yuan, and is expected to maintain growth of about 15% in the future; as a leading complete switch company, the company will benefit from industry growth in the future, and continuous growth in future performance is guaranteed. (4) The market is skeptical about the company's continued growth in the future. We believe that the company's draft equity incentive plan shows the confidence of management. The company's draft equity incentive plan requires a compound net profit growth rate of at least 30% over the next five years, demonstrating management's confidence in the company's continued growth in future performance. Furthermore, the company has overraised capital by 1 billion dollars, and it is expected that mergers and acquisitions will be carried out to further strengthen its strength and improve performance. The performance is expected to exceed expectations. The catalyst for stock price performance: Overfunded acquisitions and mergers have accelerated the industrialization process of components.