Incidents:

Recently, the national key research and development project, “Key Technology for Digital Grid”, successfully passed the inspection organized by the Ministry of Industry and Information Technology. The project was led by China Southern Power Grid Corporation Digital Grid Research Institute Co., Ltd., and jointly carried out by a number of network enterprises and well-known universities in China. Weisheng Information (Weisheng Holdings 58.56%), as the only industrial unit, participated deeply in the research on key topics of the project.

We held meetings with the company management to communicate the company's business development. The core views are as follows.

Comments and opinions:

The overseas smart meter business is growing at a high rate, and it has the driving force for continuous growth:

Currently, in the company's overall business revenue structure, domestic accounts for 75% and overseas accounts for 25%, while in overseas business, the AMI electricity business accounts for 83%, and Mexico accounts for 46% of overseas revenue.

The gross margin of the company's overseas business is slightly higher than that of domestic business, and benefiting from various factors such as lower raw material costs and exchange earnings this year, the gross margin of the company's electricity meter business has clearly increased.

The company's international business grew by 50% in the first half of 2023, mainly benefiting from the demand for smart meter replacement in the South American market. Because of the five-year plan, order growth has continued to grow. Currently, the company has three overseas factories. In addition to Mexico, it also has factories in Brazil and Tanzania, Africa. The company's overseas business has gradually expanded to neighboring countries in Mexico and Eastern Europe, and is expected to build a factory in Hungary next year. It is expected that overseas business will continue to grow. Based on the company's current order demand, overseas revenue is expected to account for 40%-50% of total revenue in 2025.

With the high growth of overseas business, it is beneficial to improve the turnover days of accounts receivable:

In the company's domestic business, due to reasons such as the payment cycle and warranty period of Guonan Network, the number of accounts receivable days reached about 300 days, but the accounts receivable period for overseas business was generally 75 days after delivery.

Therefore, in the future, as the company's overseas business grows, the company's overall accounts receivable turnover days will be improved.

Stable and high dividends, increasing majority shareholders' holdings is beneficial to boosting market confidence:

We initially expect the company's profit to increase by 40-50% for the full year of this year, with a stable dividend rate of 60% of earnings per share. Overall, the company's performance is growing well, dividends are stable and high, valuations are attractive, and the recent increase in shareholders' holdings is also beneficial to boosting market confidence.