Incidents:
On April 22, the company released its 2022 report, achieving operating income of 1,510 million yuan, an increase of 31.41% over the same period last year; achieved net profit of 155 million yuan, an increase of 26.57% over the same period of the previous year; and achieved net profit of 146 million yuan after deducting non-Gumo, an increase of 33.01% over the same period last year.
Comment:
The electrification of automobiles brings new opportunities for development, and the automotive new energy business can be expected in the future. The company's automotive new energy products include high-voltage connectors and wiring harness components, high-voltage junction boxes (PDUs) /BDUs, AC/DC charging guns, high-power liquid-cooled DC charging guns, etc. The customer structure is dominated by leading car companies such as BYD, Geely, Great Wall, and SAIC Motor. According to data from the China Association of Automobile Manufacturers, China's new energy vehicles exploded in 2022, with production and sales volume of 7.058 million vehicles and 6.887 million units respectively, up 96.9% and 93.4% year-on-year, with a penetration rate of 25.6%. According to the “Energy Saving and New Energy Vehicle Technology Route Map 2.0” forecast, by 2035, more than 150 million slow-charging pile ports will be built (including own piles and public piles), and 1.46 million public fast charging ports (including dedicated vehicles), supporting the charging operation of more than 150 million vehicles. In the future, new energy vehicles and charging supporting industries will develop rapidly and complement each other. The company has optimized the customer structure in terms of high-voltage connectors. Liquid-cooled supercharger products have competitiveness ahead of the rest of the world, and the company's new energy business is expected to maintain rapid growth in the future.
With incremental release - stock update - mass production of new products, rail transit business is expected to achieve steady development. The company has been deeply involved in the rail transit field for more than 40 years, and its products are supplied to CRRC, China National Railway Group and urban subway operators. As far as the industry is concerned, “steady growth”, “new infrastructure” and “carbon neutrality” policies favor the development of rail transit business. The “Outline of the Railway Advance Plan for a Strong Transportation Country in the New Era” proposes that by 2035, a modern railway network will be built, with a national railway network of about 200,000 kilometers, including about 70,000 kilometers of high-speed rail; according to China Railway data, it is estimated that 3,000 kilometers of new lines will be put into operation in 23. Therefore, the mileage of high-speed rail and railway lines, and the number of trains and locomotives owned are all expected to increase steadily, and new demand will continue to expand. Moreover, the equipment currently built during the 13th Five-Year Plan period will usher in maintenance and replacement time. Inventory updates will further increase the scale of demand. Future industry benefits will drive the steady growth of the company's rail transit business.
First coverage, giving a “buy” rating. We are optimistic about the company's core competitiveness in the field of high-voltage connectors and charging guns and the investment opportunities brought about by the rapid development of the NEV industry. The company's revenue for 2023-2025 is estimated to be 2,092/30.02/4.108 billion yuan respectively, and the net profit of the mother is 2.07/305/435 million yuan respectively, and the corresponding PE is 2,639/17.93/12.55 times, respectively.
Risk warning: industry competition intensifies; rail transit industry development falls short of expectations