Investment events

The company released its report for the third quarter of 2023. The third quarter of 2023 achieved operating income of 104 million yuan, a year-on-year decrease of 2.16%; net profit attributable to shareholders of listed companies was -40 million yuan, and net profit attributable to shareholders of listed companies after deducting non-recurring profits and losses was -48 million yuan.

Key points of investment

Power grid business orders and revenue have yet to be released. Off-grid business has not yet formed large-scale profits. The company's robot reserve orders at the end of 2022 declined compared to previous years. Factors such as the release of orders and delivery pace for power grid robot projects in the first half of 2023 affected the company's revenue scale. At the same time, the company has yet to generate large-scale profits in new business fields such as commercial cleaning, new energy charging, and rail transit. Other factors affecting the company's performance include operating losses of participating subsidiaries, immediate collection and refund of value-added tax on software products, reduction in government subsidies, and increased depreciation due to the consolidation of projects under construction.

Leading innovation in smart shared charging systems, which are expected to accelerate the implementation of companies across the country, the smart shared charging system is an innovative solution within the industry. It can achieve orderly charging, reduce the cost and pressure of increasing capacity; at the same time, it supports the unified provision of construction, operation, and maintenance services for charging infrastructure.

Since the first successful pilot application in Suzhou in June 2022, batch framework contracts have been signed and orders have been placed in the Suzhou region, and operations have been carried out in various places such as Wuxi, Changzhou, Beijing, Nanjing, and Yinchuan. Currently, with the exception of the company, no other manufacturer has launched a similar commercial product. In the context of the successive introduction of incentive policies for the construction of charging facilities across the country, the company is expected to accelerate implementation in various regions with its business model and leading edge in technology.

Demand for commercial cleaning robots is expanding rapidly. According to the “2023 China Public Service Robot Industry Chain Research Report” published by Yiou Think Tank, China's public service robot market is growing rapidly. Among them, commercial cleaning robots are the largest category. It is estimated that the scale will increase from 24.62 billion yuan in 2022 to 74.91 billion yuan in 2025, with a compound growth rate of 44.91% over three years. This year, the company released 2 series of 3 commercial cleaning robot products for indoor and outdoor use, and launched a new brilliant Zhixing brand, and continued to invest in layout.

Profit forecasting and valuation

Lower the profit forecast and maintain the “buy” rating. The company is a leading manufacturer of special electric robots in China, and new products are continuously launched to increase revenue. Considering factors such as delays in demand due to changes in the pace of bidding and implementation of power grid projects, the company's profit forecast was lowered due to a prudent attitude. The company's net profit forecast for 2023-2025 is expected to be -0.71, 4.00, and 547 million yuan; the corresponding EPS is -0.35, 1.94, and 2.65 yuan, respectively, and the corresponding PE for 2024-2025 is 16 and 11 times, respectively. Maintain a “buy” rating.

Risk warning

Investments in intelligent power grids fell short of expectations, market competition intensified, and the promotion of new products fell short of expectations.