The company has many years of experience in the industry of special electrical measuring instruments. In terms of the current main products, centering on the requirements of the "life cycle management of metered assets" of the power grid company, and relying on the technical advantages of watt-hour meter verification as the core link, the company has established watt-hour meter standard testing equipment, watt-hour meter automatic pipelined verification system, watt-hour meter intelligent storage system, electricity information collection system, transformer and other products, covering the whole life cycle of watt-hour meter. As 2023 enters the national network and southern power grid replacement cycle, the overlay company raises investment project capacity release and the south grid area downstream customer development, the company watt-hour meter related business is expected to grow rapidly.
The company established Sanhui Energy to actively develop energy storage business. The company set up a joint venture Sanhui Energy through a wholly-owned subsidiary and formally entered the energy storage business, with a total shareholding ratio of 56%. Sanhui energy 3GWh energy storage plant has started construction, after the completion of the MW energy storage 250MWh, household energy storage 50MWh. The company's entry into energy storage has customer and technical advantages. In terms of downstream customers, Sanhui energy storage business basically coincides with the downstream customers of the current main products. In terms of technology, a number of technologies involved in the company's current business are the key technologies of energy storage BMS and other core modules, both of which are highly homologous in technology. We believe that the current energy storage industry demand, the company set up a joint venture to formally enter energy storage, energy storage business is expected to become a new driving force for the growth of the company.
Deng Dong, former vice president of Kelu Electronics, joined the company to promote the rapid development of the company's energy storage business. On April 4, the company issued a notice announcing the appointment of Mr. Deng Dong as deputy general manager of the company and general manager of Sanhui Energy. According to the announcement, Mr. Deng Dong was the vice president of Shenzhen Kelu Electronic Technology Co., Ltd., with many years of experience in the energy storage industry. We believe that Mr. Deng Dong's rich energy storage background will contribute to the rapid development of the company's energy storage business and become an important supporting point for the company's energy storage growth.
The company has made rapid progress in energy storage business and signed cooperation agreements with various parties. On June 2, the company signed a strategic cooperation framework agreement with CLP East China Survey, Design and Research Institute to actively develop the domestic large reserve market. On June 8, subsidiary Sanhui Energy and Penghui Energy signed a strategic cooperation agreement to help the company lay out the global energy storage market. On June 19, Sanhui Energy, a subsidiary, signed a procurement contract with Xu Ji Dianke. The company will provide energy storage DC side supporting equipment and systems for the 10MW/20MWh energy storage system project of Shenneng Ruoqiang wind power project, with a total contract amount of 21.24 million yuan. The contract is the company's first major energy storage order, which not only marks that the company has been recognized by domestic mainstream downstream manufacturers, but also marks Sanhui Energy has the supply capacity in the field of energy storage.
Investment strategy and rating: we expect the company to achieve a revenue of RMB 486 million in 2023-2025, a net profit of RMB 0.39 billion and a net profit of RMB 1.90 billion, corresponding to a PE of 62.60x and 12.73x in 2023-2024. Considering that the company will rapidly expand its energy storage business in 2024 and the related business such as traditional watt-hour meters will grow rapidly with the meter change cycle, we will give the company 25 times PE in 2024 with a target price of 37.25 yuan. For the first time, the coverage gives it a rating of "better than the market".
Risk hint: the competition in the energy storage industry aggravates the risk, the business development is not as expected, and the release of the company's capacity is not as expected.