Main points of investment

Harbin Electric Power Group holding veteran motor leader, will fully benefit from the new trend of industrial energy saving, consumption reduction and upgrading, and start the second spring. As one of the earliest motor manufacturers in China, the company has a history of more than 80 years and has been reorganized and listed in 2012. Its main products are explosion-proof motors and ordinary motors, ploughing brand routes. The company is the domestic leader in the field of explosion-proof motor, and has a high market share in the fields of petroleum and chemical industry, coal and coal chemical industry, and iron and steel. In 2022, the state issued the "Industrial Energy efficiency improvement Action Plan". The new trend of energy saving and consumption reduction will increase the proportion of high efficiency and energy saving motors, and the motor leader will fully benefit.

Benefiting from the restart of the third generation of nuclear power, the company takes the lead in the layout of special motors in nuclear power, and the fourth generation of high-temperature gas-cooled reactor main helium fan has been developed and delivered for nearly a decade. High-tech combined with big country craftsmen to build a solid moat. The company is the core supplier of K1\ K3 nuclear power special motors in China. The third generation of nuclear power has been digested, absorbed and innovated. Ten new nuclear power units have been approved in China in 2022, which will bring a significant increase in the company's nuclear motor orders. The national major special high-temperature gas-cooled reactor was successfully connected to the grid at the end of 2021, which marks the "China-led" realization of China's fourth-generation nuclear power technology, and the high-temperature gas-cooled reactor is also the path of the fourth-generation nuclear power technology with the most commercial conditions. as the main supplier of helium fan for fourth-generation nuclear power in China, it will fully benefit.

Started the acquisition of 51% of Harbin dynamic equipment shares, won the crown of the third-generation nuclear power industry chain the most dazzling pearl. The nuclear main pump is the equipment with the highest manufacturing difficulty coefficient and the greatest value in the third-generation nuclear power industry chain technology. Harbin undertakes the important task of localization of the third-generation nuclear power AP1000 and CAP1400 national major special main pump, from technology introduction, digestion, absorption to localization for more than a decade, and completed the first localization AP1000 shielding main pump manufacturing task with Shen Drum Group in 2018, while using imported technology to develop the CAP1400 project shielding motor. In the third-generation nuclear power "Hualong No.1" route, the main pump adopts shaft seal pump technology, and Harbin also undertakes the task of supplying the shaft seal main pump of the first pile in China (Fuqing truck) and the first pile overseas (Pakistan).

Jiadian disclosed a major asset purchase (draft) on July 19, 2023, and plans to pay 400 million yuan for a 51% stake in Harley. The acquisition is expected to strengthen the company's barriers in the field of nuclear power motors and fully benefit from the resumption of nuclear power construction.

Profit forecast: we expect the company's return net profit from 2023 to 2025 to be RMB 448, 560, 656 million respectively, an increase of 27.51%, 24.99% and 17.16% over the same period last year. In 23-25, the PE of the company was 17.57x/14.06x/12.00x, covered for the first time, and rated as "overweight".

Risk hints: raw material price fluctuation risk; industrialization process of high temperature gas-cooled reactor is less than expected risk; industry competition risk.

Profit forecasts and financial indicators