Main points of investment

The performance of the rail transit and industrial plate is under pressure, and the vehicle and energy information plate is growing steadily: the company released its mid-2023 report, and its operating income during the reporting period was 680 million yuan, which was basically the same as that of the same period last year; affected by the changes in the payment of equity incentives and income structure, the net profit attributed to the owner of the parent company was 69 million yuan (year-on-year). Specific sub-block to see: 1. Business income of rail transit and industrial sector declined. Affected by the overall recovery pace of the rail transit industry is not transmitted to the connector parts end, rail transit and industrial plate operating income of 311 million yuan (year-on-year-11.45%).

two。 Vehicle and energy information plate is growing steadily. The company seizes the opportunity of rapid development of new energy vehicles and charging industry, realizing 333 million yuan of new energy vehicle business revenue (+ 11.53% compared with the same period last year).

Rail transit business is the basic market, the company actively expand product categories: the company for the domestic rail transit connector leader, in recent years, non-connector products in the rapid penetration of customers to achieve growth. In the first half of 2023, the business revenue of rail traffic connectors was basically the same as that of the same period last year, and the decline in revenue from rail non-connector doors and through channels led to the overall pressure on the rail traffic business plate. With the progress of the project in the second half of 2023 and the gradual release of orders from 2024 to 2025, rail transit revenue is expected to increase significantly.

Subway and high-speed rail construction, rail transit follow-up maintenance will provide the company with a growing market space.

High-voltage connectors have accumulated deeply, and customer structure optimization has accelerated growth: high-voltage connectors are one of the core components of new energy vehicles. We estimate that the domestic market space is expected to reach 36.9 billion yuan in 2025, and the CAGR will be 16.9% in 22-25. The rise of domestic new energy vehicle brands has brought opportunities to reshape the industrial chain. as one of the earlier domestic manufacturers, the customer structure has been gradually optimized. at present, it has entered the supply chain system of domestic first-line brands and joint ventures, such as BYD, Huawei, Geely, Great Wall, Chery, Changan and so on. We believe that in the future, the company's cooperation with BYD and other high-quality customers will be further deepened, continue to expand the supply category, increase the supply share, and increase the value of products.

With the rapid growth of the charging pile market, the liquid-cooled overcharge gun is gradually released: according to our estimation, the market space of the charging gun in China, the United States and Europe will reach 366 million yuan in 2025. 1.96 billion yuan. At the same time, the rapid penetration of fast charging piles will also lead to the demand for liquid-cooled overcharge guns. The company has a wide range of super-charging gun products, covering DC and AC. The liquid-cooled high-power supercharge gun actively distributes the domestic and foreign markets. In the foreign market, the European standard DC charging gun has passed the CE, CB and Tubv certification, and the domestic market has supplied products to many domestic vehicle manufacturers, charging pile manufacturers and operators. We are optimistic about the continuous improvement of the competitiveness of the company's supercharged gun products and gain excess share in the market with large-scale expansion of demand.

Profit forecast and investment rating: the company deeply distributes the three major business sectors of rail transit and industry, vehicle and energy information, and special equipment to open up overseas markets. we are optimistic that the company will consolidate its leading position in the field of rail connectors and the business of new energy connectors and charging guns. Due to the pressure on the performance of the rail transit and industrial sectors in the first half of the year, we adjusted the company's 23-25 return net profit forecast to RMB 185,000,000 (the previous value was 233,392 million). The current market capitalization corresponds to a PE of 26.41, 18.8 and 15.24 times, respectively, maintaining a "buy" rating.

Risk hint: the market demand for new energy vehicles is lower than expected; the growth rate of the charging pile industry is lower than expected.