Mingyang Electric released a report for the third quarter of 2023: the company achieved operating income of 3.303 billion yuan in the first three quarters of 2023, an increase of 65.94% over the same period last year, and a net profit of 319 million yuan, an increase of 88.66% over the same period last year.

Main points of investment

Outstanding performance and improved profitability

2023Q1~Q3 achieved revenue of 3.303 billion yuan, an increase of 65.94% over the same period last year, a net profit of 319 million yuan, an increase of 88.66% over the same period last year, a gross profit margin of 22.96%, an increase of 1.00pct over the same period last year, and a net profit rate of 9.66%, an increase of 1.17pct over the same period last year. Sales / management / R & D / financial expense rates were respectively year-on-year changes-0.26/-0.20/+0.12/-0.71pct.

2023Q3, the company achieved revenue of 1.404 billion yuan, an increase of 67.54% over the same period last year, an increase of 17.73% compared with the same period last year; the net profit returned to its mother was 156 million yuan, an increase of 112.16% over the same period last year, and an increase of 32.00% over the same period last year; gross profit margin and net profit margin increased to 24.63% and 11.13% respectively quarter by quarter, increasing 1.91pct and 1.20pct respectively.

There is a high proportion of income in the field of new energy, and the sea breeze scene has a significant advantage.

The company's main products include box-type substations, complete sets of switchgear and transformers. 2023H1's box-type substations, complete sets of switchgear and transformers account for 69%, 15% and 12% of the total revenue, respectively, and gross profit margins are 20.48%, 18.99% and 26.78%, respectively. The company's products are mainly used in two major areas: new energy (photovoltaic, land breeze, sea breeze, energy storage) and new infrastructure (data center, smart grid), accounting for more than 95% of the main business income. The company has established long-term cooperative relations with "five big and six small" power generation group, Guonan two power grids, two major EPC units (China Power Construction, China Energy Construction), communication operators (China Mobile Limited, China Unicom, etc.) and energy solution service providers (Sunshine Power, Mingyang Intelligence, Shangneng Electric, Hewang Electric, etc.). The products cover the national market and are exported to Southeast Asia, the United States and Europe.

During the period from 2020 to 2022, the proportion of the company's revenue from the downstream areas of new energy fluctuated with the development of the industry, with land wind up to 43%, sea breeze up to 23%, photovoltaic up to 36%, and energy storage increased to 6% year by year. What is worth paying attention is that the company's large-capacity offshore wind power boost transformer, offshore wind power inflatable medium voltage ring grid cabinet and other products, as the key equipment connected to the sea wind grid, have successfully broken the monopoly of foreign brands and obtained batch orders. it has realized the domestic replacement of some sea wind supporting equipment in Mingyang Intelligence, and is currently in the process of entering other wind power manufacturers in an all-round way. The proportion of related party transactions from Mingyang Intelligence in 2023H1's revenue has dropped to 13% of the total revenue. At the same time, with the increase in the proportion of sales of special offshore dry-type transformers with higher product added value and higher gross profit margin, the gross profit margin of the company's transformer has increased synchronously. It is optimistic that through the expansion of the category of Haifeng products and the expansion of the number of customers, the company will fully benefit from the acceleration of Haifeng construction in the two years after the 14th five-year Plan.

Promote the production capacity of fund-raising projects, and continuously optimize the capacity structure.

The company's IPO plans to invest in two projects and supplementary liquidity: 1) Intelligent transmission and distribution equipment R & D and manufacturing center project: plans to build production lines for large-capacity transformers and box-type substations, with a production capacity of 2450 units. It is planned to establish an intelligent transmission and distribution system R & D center through the research on the key technologies of intelligent transmission and distribution systems such as large-capacity offshore wind power boost system, smart grid distribution equipment, rail transit switchgear and so on. 2) production and construction project of 20,000 sets of intelligent environmental protection medium voltage switchgear per year: it is planned to build a digital plant of intelligent environmental protection medium voltage switchgear with a production capacity of 20,000 sets. It is optimistic that the company will ensure long-term growth through high-quality capacity expansion and capacity structure optimization.

Profit forecast

From 2023 to 2025, the forecast company's income is 50.09,63.36 and 8.026 billion yuan respectively, the EPS is 1.52,2.13,2.79 yuan respectively, and the current stock price corresponding to PE is 19.8,14.1 and 10.7 times respectively. As a leading company in the transformer link, the company benefits from the acceleration of offshore wind power construction at home and abroad, covering it for the first time and giving it a "buy" investment rating.

Risk hint

Demand is lower than expected risk; gross profit margin decline risk; raw material price rise risk; customer development is not expected risk; capacity construction schedule is not as expected risk; market systemic risk.