Event

Witeng Electric released its semi-annual report of 2023: in the first half of 2023, the company achieved operating income of 1.034 billion yuan, an increase of 40.48% over the same period last year, and a net profit of 39 million yuan for shareholders belonging to listed companies, an increase of 18.91% over the same period last year.

Main points of investment

The busbar business is growing steadily, and the shipments of photovoltaic welding strips are increasing.

The company's 2023Q2 realized revenue of 600 million yuan, an increase of 48.3% over the same period last year, an increase of 40.2% over the same period last year, and a net profit of 25 million yuan, an increase of 43.8% and 89.8% over the same period last year. The company's business covers three major businesses: power distribution equipment, new photovoltaic materials, and energy storage systems. In the first half of the year, the busbar business of the company grew steadily, the revenue of high and low voltage busbars increased by more than 20% compared with the same period last year, and the revenue of photovoltaic welding strips increased by more than 50% compared with the same period last year. Shipments increased by more than 80%. Benefiting from the N-type iteration of photovoltaic cells and modules, the SMBB solder tape used in photovoltaic N-type TOPCon battery modules is also rapidly released, and the proportion of shipments is increasing. 2023Q2's gross profit margin is 17.83%, an annular increase of 1.76pcts, and a net profit margin of 4.7%, an annular increase of 1.24pcts.

The energy storage market continues to grow rapidly, and the company's business in the second half of the year is expected to expand the total scale of domestic grid-connected energy storage projects in the first half of 2023.

7.59GW/15.59GWh, has been close to the total scale of 7.69GW/16.26GWh grid connection in 2022, and the market continues to grow at a high speed. The company applies a number of technologies formed in the research and development of power distribution products to the energy storage system, and can choose appropriate energy storage schemes and products according to customer needs. At the level of building the whole industry chain, the company is gradually expanding the production capacity of key components of the energy storage system, such as energy storage converter (PCS) and battery management system (BMS). Except for the high-power PCS, fire-fighting equipment, wires and cables needed by the energy storage system on the grid source side, other components can be produced by themselves, establishing the coverage of the whole industry chain from component production to system integration. Create the cost and quality advantage of the layout of the whole industry chain. Some products of energy storage system have passed many domestic and international authoritative certificates such as UL, FCC (North American market), IC (Canadian market), IEC (EU market), VDE (German market), CE (EU market), CB, ROHS and so on. We expect the company to expand its energy storage business in the second half of the year.

Profit forecast

The forecast company's income from 2023 to 2025 is 29.8,45.3 and 5.79 billion yuan respectively, and the EPS is 0.78,1.28,1.72 yuan respectively (without considering the impact of IPO). The current stock price corresponds to PE of 21.8,13.4,10.0 times respectively, maintaining the "buy" investment rating.

Risk hint

The risk of raising investment projects is lower than expected, the risk of market competition intensifies, the risk of declining demand downstream, the risk of lower-than-expected demand for energy storage, the risk of rising prices of raw materials, etc.