Recommended logic: 1) the extension of the industrial chain to enhance the added value: the company extends from booster transformers to box-type substations with good profits and large space. It is estimated that the global photovoltaic boost transformer / substation market will reach 143.358 billion yuan in 25 years.

The company binds the sunshine power supply, and the stickiness of the beneficiary customers is expected to cut into new customers. 2) the charging and releasing capacity of magnetic components: the gross profit margin of magnetic components of trams and charging piles is higher than that of optical storage, the company has a low base and high elasticity, and the CAGR of car charging business in 23-25 years is expected to exceed 100%. 3) more extensive power supply space into Panama: it is estimated that the domestic phase-shifting transformer / Panamanian power market space will be 2116.9 billion yuan in 25 years, the company is expected to extend from a single phase-shifting transformer to the whole set of Panamanian power supply for sale, and enjoy the demand volume driven by the development of AI+ digital economy.

Break free from the shackles of magnetic components and benefit from the construction of photovoltaic ground power stations to increase the demand for boost. The company has developed from the main inductor / small transformer to the grid-connected transformer needed for the boost of photovoltaic power generation to achieve multi-level business growth.

And the company is not satisfied with this, through supporting distribution cabinets and other integrated box-type substations, improve a single set of added value to drive profit growth. In 2022, the company's revenue from photovoltaic step-up transformers increased by 112.2% compared with the same period last year, and the inductance of matching inverters increased by 42.1% over the same period last year. The gross profit margin benefited from product structure optimization increased by 5.2pp over the same period last year. The company has deeply bound Sunshine Power and other core customers, with a single major customer revenue of more than 800 million in 2022, which is expected to enhance transformer shipments through inverter customer stickiness, benefit from industry demand boost + large customer volume, and drive the development of the company.

The development of AI+ digital economy has led to an increase in demand for data centers, and the company is expected to cut into Panamanian power to welcome new machines. Panamanian power supply has the advantages of higher module efficiency, smaller footprint and faster construction cycle, and the permeability is expected to increase gradually. According to our calculation, it is estimated that the domestic market space of phase-shifting transformer / Panamanian power supply will be 216.9 billion yuan respectively in 2025. Previously, the company's data center products are only phase-shifting transformers, and the company is good at extending the industrial chain with deep technology accumulation. With reference to the successful cases of the company's photovoltaic industry, it is expected to become a new player of Panamanian power in the future, with a good competition pattern and high profits.

Fund-raising multi-projects to achieve diversified expansion to support long-term and rapid development in the future. In 2020 / 2022, the company successively arranged photovoltaic, data center, energy storage and other businesses through non-public offerings, and implemented private placement in 2023, with a total financing of 2.93 billion yuan. The purpose of the company's investment in a digital plant is to improve the penetration of automated production, further reduce costs and increase efficiency, superimpose multiple layouts to achieve economies of scale, and profitability is expected to improve.

Profit forecast and investment advice. It is estimated that the company's revenue from 2023 to 2025 will be 3.63 billion yuan, 4.71 billion yuan and 6.05 billion yuan respectively, and the growth rate of net profit for the next three years will be 25.5%, 49.5% and 32.9%, respectively. The company is an established enterprise of magnetic components in China, and the development of products and application fields go hand in hand. Multi-business is expected to bring new performance increments to the company, giving the company 20 times PE in 2024, corresponding to the target price of 18.4 yuan, and giving a "buy" rating for the first time.

Risk tips: risk of macroeconomic volatility; structural price and supply risk of raw materials; risk of exchange rate fluctuations affecting the company's overseas business; risk of lower-than-expected downstream demand; risk of lower-than-expected delivery of new product research and development; risk of lower-than-expected power penetration in Panama; risk of lower-than-expected development of new customers.