Deep ploughing the power transmission and distribution industry, through the upstream oriented silicon steel
Company background: the company is one of the few power transmission and distribution service providers to get through the upstream key raw materials, integrating material processing-manufacturing-solution. Deep ploughing power transmission and distribution and silicon steel industry for many years, a solid technical foundation, master a number of industry core patents. With a wide customer base, we have established a sales regional layout with southwest as the core, central China, South China and other fast-growing regions, and silicon steel products are exported to many overseas countries.
Performance: revenue and net profit CAGR for 18-22 were 29.66% and 53.7%, respectively. The company's oriented silicon steel business accounted for an increase in revenue, accounting for 59% in 22 years. 2023H1's overall revenue was 1.235 billion yuan, an increase of 9.82% over the same period last year. The net profit of returning home was 154 million yuan, an increase of 32.00% over the same period last year. From a business point of view, the revenue of the company's silicon steel business and transmission and distribution and control equipment business in 2022 was 14.89 yuan and 977 million yuan respectively, an increase of 45.55% and 15.62% respectively over the same period last year.
With the rapid development of oriented silicon steel business, the company is actively expanding the layout of production capacity.
From 2018 to 2022, the company's business income of oriented silicon steel increased steadily, with CAGR reaching 59.17%. The company's oriented silicon steel ranks first: the cost of oriented silicon steel accounts for about 30% of the production cost of a single transformer. It is mainly used in the manufacture of transformers (cores) and is a key raw material for all kinds of transformers. In 2022, the company produced 111200 tons of oriented silicon steel, ranking third in the country and first in private enterprises, with a production and sales rate of 103.51%. New production capacity:
The company put into construction 80,000 tons of high-end magnetic new materials project in June 2022, and part of the production line of the project was put into production on June 30, 2023. It is expected that the production of foreign equipment will increase by 20,000 to 30,000 tons in 2023. Due to the long production cycle of foreign equipment, it is expected to be fully put into production in June 2024, with an increase of 50,000 to 60,000 tons that year.
The power transmission and distribution business has made steady progress, and 23H1 revenue has increased by 42.66% compared with the same period last year.
From 2018 to 2023H1, the business revenue of transmission, distribution and control equipment maintained a rapid growth, while the revenue of 23H1 business increased by 42.66% compared with the same period last year. Due to the demand for energy transformation, carbon emission reduction and the rapid development of new energy, smart grid and other positive factors, the growth momentum is expected to continue.
Advantages of integrated industrial chain: the company has created an integrated industrial chain from oriented silicon steel to transformer, which can ensure higher transformer production efficiency, product quality, lower production cost, and form a significant competitive advantage. Relying on the integrated industrial chain, the company has established long-term and stable cooperative relations with State Grid, Southern Power Grid and its power companies and power supply bureaus in many provinces and cities.
Investment suggestion: the company is based on the power transmission and distribution industry, upward access to the upstream key raw materials, obvious advantages of integrated industrial chain. We estimate that the company's revenue from 2023 to 2025 will be 30.45,40.05 and 5.051 billion yuan respectively, with corresponding growth rates of 20.5%, 31.5% and 26.1%, respectively, and the corresponding net profit will be 3.70,5.10 and 671 million yuan respectively, with corresponding growth rates of 24.0%, 37.9% and 31.7% respectively. Based on the closing price on September 21, the corresponding PE for 2023-2025 is 14x, 10x and 7x. Cover for the first time and give a "recommended" rating.
Risk tips: macroeconomic and industry environment deterioration risk; market competition aggravates the risk; accounts receivable can not be recovered risk; project construction is less than expected risk.