Event: The company released its report for the third quarter of 2023. In the first three quarters of 2023, the company achieved operating income of 512 million yuan, an increase of 198.94% over the previous year; realized net profit of 225 million yuan, an increase of 280.67% over the previous year; and realized net profit after deduction of 11 million yuan, an increase of 139.28% over the previous year.

Performance continues to rise, and revenue from the new energy business continues to rise

In the first three quarters of 2023, the company achieved operating income of 512 million yuan, an increase of 198.94% over the previous year, net profit of 225 million yuan, an increase of 280.67% over the previous year; in the third quarter alone, it achieved operating income of 259 million yuan, an increase of 389.81% over the previous year, and realized net profit of 121 million yuan, turning a loss into a profit. The main reason for the high increase in the company's operating income is the increase in the sales revenue of charging piles in the company's new energy business, and the reason for the sharp increase in net profit is that the sales revenue of charging piles in the new energy business has increased dramatically, profits have increased, and at the same time, a single item of bad debt is prepared for return.

Continued deployment of charging stations and energy storage businesses, and two approvals have been approved to help the company's business layout.

In terms of charging piles, the core components of the company's charging piles are independently developed and have mastered Starring power distribution technology, which is more cost-effective than peers. Currently, it has been verified by downstream customers such as the National Grid, Xiaoju Charging, BP (British Petroleum), Shell, etc.; the company is actively deploying overseas markets and currently has 60/120/180kW European standard integrated DC chargers, which can provide DC fast charging services for European and Japanese standard electric vehicles. In terms of energy storage products, the company has launched 30kW/64kWh and 107kW/215kWh energy storage systems, which can be applied to medium and low voltage distribution networks, distributed power generation, microgrids, and user-side energy storage products to promote complementary advantages and collaborative development of energy storage and charging products.

In September 2023, the Xi'an Electric Vehicle Charging and Switching Engineering Technology Research Center and the Xi'an New Energy Vehicle Smart Charging Innovation Consortium led by the company were successfully selected into the “2022 Xi'an Engineering Technology Research Center Proposed Accreditation List” and the “2023 Xi'an Innovation Consortium Proposed Approval List”, which helped improve the company's independent innovation capabilities and core competitiveness.

“New energy+light storage and charging” has broad prospects, and the company is expected to fully benefit.

Affected by the growth of the NEV market and policy support in the past two years, the charging pile market is growing rapidly. In 2017-2022, the country's new energy charging stations increased from 7.2 billion yuan to 80.96 billion yuan; in the first three quarters of 2023, the charging infrastructure increased by 2,432 million units, of which the number of public charging stations increased by 664,000, and the number of private charging stations built with vehicles increased by 1.768 million, up 27.9% from the previous year. As of September 2023, the cumulative number of charging infrastructure nationwide was 7.642 million units, an increase of 70.3% over the previous year. As the growth of new energy vehicles exceeds expectations, the charging pile industry chain is expected to usher in a storm.

The company is deeply involved in the “charging+energy storage” integrated energy field. In August 2023, the company won the bid for CNPC's charging equipment procurement project, injecting momentum into the company's business.

The fixed increase was successfully implemented. The proposed capital increase subsidiary helped the development of the optical storage and charging business. In August 2023, the company's fixed increase was successfully implemented. With this offering, the company's overall financial strength and solvency have been enhanced, and working capital has been replenished. At the same time, the company announced in October that it plans to increase the capital of its Xi'an subsidiary by RMB 200 million in monetary form, which is expected to better help the company lay out optical storage and charging business in the future.

Profit forecast: We maintain the company's profit forecast for 2023-2025. The net profit for 2023-2025 is expected to be 0.82, 1.44, and 185 million yuan. The corresponding PE is 59, 33, and 26 times, respectively, maintaining the “increased holdings” rating.

Risk warning: Profit from charging stations and energy storage falls short of expectations; project development progress falls short of expectations; risk of industry policy fluctuations.