Summary of the report:
Data + digital energy two-wheel drive, data center + new energy coordinated development. The company has been deeply engaged in electronic and power technology for more than 30 years and is a leader in the UPS industry. It entered the field of new energy in 2007, cut into the field of data center in 2009, and put forward the strategic layout of "Kehua data", "Kehua Digital Energy" and "Gemini" in 2021. At present, the company's business covers three major fields of smart energy, data center and new energy.
Energy storage industry: energy storage explosion at home and abroad. From the perspective of the domestic market, under the background of double carbon, local governments have issued a series of favorable policies, scenery allocation has become a trend; from the overseas market, the energy crisis, high electricity prices and other factors drive the global household storage permeability.
PCS: the volume of shipments ranks second in China, and it is also possible to bind large integrators to go out to sea. (1) PCS is related to power grid security, technology and project experience constitute the key to PCS competition. Kehua relies on UPS experience to cut into PCS track, and according to CNESA,2022 domestic energy storage PCS shipments ranks second in the industry, the company's PCS cumulative installed scale exceeds 2.6GW, and the project is experienced. (2) benefiting from the rising installation of overseas scenery, the gap between supply and demand of overseas PCS is enlarged, and relying on the advantages of cost and supply chain, domestic inverter manufacturers have broad prospects for going to sea, and the channel is the key to energy storage. Kehua has established cooperation with leading integrators such as Elin in Turkey and JGH in Denmark.
Integration: Dazhuang has sufficient experience, household storage iStoragE card products and channel barriers, is expected to open overseas markets. The main results are as follows: (1) the integrated pattern of large storage is scattered, and many kinds of components need to be matched reasonably. The higher the self-control rate is, the more stable the system is. Relying on self-research PCS, BMS, EMS and other links to establish product barriers, Kehua has accumulated large-scale project experience through Ningxia 100MW shared energy storage power plant and Anhui 103MW energy storage power station. (2) the integration becomes the bottom of the smile curve of the energy storage industry chain. under the background of downward price, Kehua relies on strong cost control ability and leads the gross profit margin. (3) the customer storage side issues iStoragE to focus on overseas markets. It has passed UL certification and cooperated with German Meesenburg, American Juniper and other electrical distributors with high product and channel barriers.
Data center: asset impairment leads to short-term pressure, light asset transformation to invigorate cash flow. Due to the provision of impairment losses, IDC business is under short-term pressure, but it is accompanied by the development of AI and the "calculation of East and West".
With the strategic landing, the IDC industry has broad prospects. The company's IDC products continue to push through the old and bring forth the new, PUE is superior to the industry level, and carry out deep cooperation with Tencent and other customers. In addition, the company has carried out a light asset transformation, selling some of its existing data centers and turning them into generation operations to invigorate cash flow.
Profit forecast: PCS order reserves are sufficient, household savings iStoragE elastic release, light assets after the transformation of IDC profits are expected to be repaired. We estimate that the company's revenue from 2023 to 2025 will be 87.98 / 115.02 / 14.963 billion yuan, the net profit will be 7.01 / 9.42 / 1.178 billion yuan, and the corresponding PE will be 19.93 / 14.83 / 11.86 times. Give the company 2024 20 times PE valuation, corresponding to the target price of 41 yuan, the first coverage, given a "buy" rating.
Risk hint: energy storage business development is not as expected, profit forecast and valuation judgment is not as expected.