The industrial control product matrix is complete, and the digital factory business enhances the market share. The company starts with PLC and servo control system, and currently forms a diversified industrial control equipment manufacturer such as PLC/ servo system / frequency converter / CNC machine tool / sensor, and the market share of domestic servo system is second only to Huichuan technology. The four-year CAGR of revenue and return net profit from 2018 to 2022 were 35.2% and 15.8% respectively, with company servo systems and PLC as the main sources of revenue, accounting for 80.3% and 12.9% of revenue in 2022, respectively. At present, the company has gradually changed its role from a new energy industrial control equipment supplier to a digital factory and integrated solution provider along the layout of "control + drive + executive sensing + mechatronics".

The domestic industrial automation market has a broad space, and the localization rate is expected to be improved. The size of the domestic industrial automation market is nearly 100 billion, and the correlation between market demand and the economic cycle is high, and short-term economic repair is good for the market to pick up; in the medium and long term, the increase in the domestic aging rate and the decline in the population dividend will boost the automation rate of the manufacturing industry. taking into account the country's successive introduction of policy incentives, the domestic automation equipment rate is expected to increase. Among them, the OEM market is a new and important growth point in the future.

The industry of intelligent manufacturing catalysis has changed, and the logic of domestic substitution has been strengthened. After years of policy support and exploration, domestic intelligent manufacturing is on the eve of rapid development. According to the construction feedback of the pilot project, intelligent manufacturing needs to reshape the software and hardware of the production system and introduce new industrial control equipment. After the transformation, the production efficiency, energy efficiency, operating cost, product defect rate and other indicators have been significantly improved. There are many small and medium-sized enterprises in China, and the long-tail market of intelligent manufacturing is significant. It is expected to increase the market share of domestic industrial control systems through intelligent manufacturing.

The company has obvious competitive advantage and is optimistic about the potential for performance growth. With strong technical strength, the company's PLC and servo system have reached the level of mainstream manufacturers. Through the use of self-developed encoders, the product core indicators and cost advantages are obvious, and the technology gap with foreign leading companies is gradually narrowing. The first-mover advantage is obvious. The company has strategically cut into the field of new energy industrial control equipment in 2020, has established a solid cooperative relationship with the head enterprises, the servo system market share has been ahead of most domestic competitors, and the follow-up supporting PLC growth is expected. The product matrix is rich, and the product matrix of the company's industrial control equipment has been on a par with the head enterprise. relying on local advantages and early brand accumulation, several sets of digital factory schemes have been formed one after another, promoting the steady growth of the market share.

Profit forecast: the company's operating income from 2023 to 2025 is expected to be 12.2 / 15.6 / 1.98 billion yuan, an increase of 29.3%, 28.2% and 26.5% respectively over the same period last year, and the net profit is 1.0 / 1.3 / 180 million yuan respectively, an increase of 15.2%, 25.4% and 36.9% over the same period last year. Maintain the rating and give it a "buy" rating.

Risk tips: innovation falls short of expectations, orders fall short of expectations, performance forecasts and valuations fall short of expectations