Adhering to the "smart power + new energy" two-wheel drive strategy, to carry out three major businesses. The company responds to the development trend of smart power and green energy by laying out smart grid, recharging and energy storage business. The products of smart grid business are mainly smart electrical switchgear, smart meters and power consumption information collection systems; the main products of recharging business are charging piles and charging station projects; energy storage business is mainly oriented to the needs of industry and commerce and grid-side energy storage, creating a complete set of solutions on the DC side except the battery. In 2022, the company's operating income was 1.166 billion yuan, an increase of 9% over the same period last year; its net profit was 48 million yuan, an increase of 53% over the same period last year; and the comprehensive gross profit margin was 24.3%, an increase of 2pct over the same period last year. This is mainly due to the increase in gross profit margin of intelligent electrical switchgear business and new energy charging facilities business, and the improvement of profitability of the main business.

With the large-scale development of smart grid industry, the company has a wide range of business services. The company has been engaged in the field of smart grid for many years, and the business of smart grid is mainly in the fields of terminal power consumption and power equipment. The main customers of the company's smart grid business are State Grid Corporation and some provincial and municipal power grid companies and non-grid enterprises, of which power grid enterprises account for the majority. The company is headquartered in Northeast China, and its subsidiaries are distributed in East, South and Central China, with a wide range of smart grid services.

Under the new energy strategy, double carbon background and digital trend, the company has broad prospects for the development of smart grid business.

The development momentum of recharging business is good. The company mainly relies on the subsidiary Nanjing Neng Rui to carry out recharging business. From 2020 to 2022, Nanjing Neng Rui's business income continues to grow and has a good momentum of development. The company's charging pile products cover a variety of power AC, DC charging and other series; the company's charging stations cover special scenes such as public transport, logistics park, industrial park and high-speed service area; the company cooperates with various parties at home and abroad to start a number of power exchange projects. In 2023, the company cooperated with Russia in the "Life Supply Line" project, which laid out the integrated station of scenery storage, charging and recharging. In 2022, the operating income of the company's recharging business was 222 million yuan, an increase of 68.25% over the same period last year, sales orders increased by 35.7%, and the number of products sold increased by 64.2% over the same period last year. The customers of the company's recharging business are more diverse, including State Grid, Southern Power Grid, bus companies, logistics companies, charging operators and so on.

The emerging energy storage business is developing rapidly and there are plenty of project orders. The company began to layout energy storage business at the end of 2021, mainly for the energy storage needs of industry, commerce and power grid. at present, it has a strong self-research product system. The company has formed R & D, design, production and manufacturing capacity including energy storage converter, energy storage module PACK, energy storage system, etc., at the same time, energy storage power stations are distributed and operated in many places throughout the country, and the capacity of energy storage business is gradually expanded. At present, the company is rich in energy storage orders and has a great market advantage. The energy storage market demand is strong, the company has the independent research and development ability of energy storage products and the market advantage of energy storage orders, the development prospect is good.

Profit forecast and investment advice: we expect the company's operating income in 23-25 to be 25.55,32.91 and 4.347 billion yuan, with a year-on-year growth rate of + 119%, + 29% and + 32%, and the return net profit is 1.74,2.75 and 382 million yuan. the year-on-year growth rate is + 261%, + 58% and + 39%, and the corresponding valuation is 32.5mm 20.5max 14.8 times. Considering the gradual landing of the company's energy storage and charging pile orders, it is optimistic about the future development of the company, covering it for the first time and giving it an "overweight" rating.

Risk tips: energy storage and charging pile orders are lower than expected risk; industry competition intensifies risk; industry scale measurement deviation risk; research and report the risk of not updating information data in a timely manner.