In 2023, Tongrun Equipment completed the restructuring, acquired Zhengtai Power and sold the original equipment business. The controlling shareholder was changed to Zhengtai Electric, and the business was adjusted to “new energy+metal products”. Zhengtai Power's inverter products lead the market share in the North American and Korean segments, and have advantages in product strength and channel capabilities. The company is actively expanding product categories. The contribution of new products such as power plants and optical storage will increase, and the expansion of European and other markets will also bring growth. The US PV market is currently greatly affected by high interest rates, and there is great potential for future growth. The company is expected to become a strong player in the field of inverters, and for the first time, it has been covered with an “gain” rating.
Restructured and acquired Zhengtai Power. Tongrun Equipment's original business was metal sheet metal products such as tool boxes. Its business scale is already at the forefront of the industry. In 2007, the A-share listing was completed. In May 2023, the company integrated assets related to Zhengtai Power's optical storage converter through a cash purchase and placed the original transmission and transformation equipment assets the following month, while transferring the controlling shareholder to Zhengtai Electric through an agreement.
It has a competitive advantage in inverter market segments such as North America and South Korea. Established in 2009, Zhengtai Power has now installed more than 25 GW of inverters and more than 1 GWh of energy storage installed worldwide. In particular, it is leading the market share in North America and South Korea. Among them, the North American industrial and commercial photovoltaic market share has maintained more than 30% for a long time, and has closely cooperated with Korea and Hyundai, with a market share of about 20%. The company has established a global marketing service system, and the North American business was localized earlier. The North American region established cooperation with nearly 200 developers. In the 2023 BNEF inverter financability ranking, the CHINT brand rose to TOP1 for the first time. In 2021, Zhengtai Power launched a factory in Thailand to further respond to overseas demand.
Accelerate the expansion of all categories and markets. 1) Previously, Zhengtai power products and channels were more focused on the heavy industrial and commercial power segment, and were relatively weak at both the high and low ends. In the past few years, the company has begun to complete household and large series products, and improve energy storage products to form a complete supporting solution for optical storage inverters. At present, the company has begun to receive orders for power plants, and it is expected that power plants and energy storage products will be an important growth point for the company in 2024. 2) The company has an advantage in the North American industrial and commercial market, but it has hardly been deployed in the European market before. Currently, the company is gradually penetrating into other parts of Europe, starting with regions such as Eastern Europe and Poland. 3) In addition, Zhengtai New Energy and Energy, a subsidiary of the Zhengtai Group, can also bring business collaboration or impetus to Zhengtai Power in markets such as power plants and household photovoltaics.
The raw metal products business is expected to pick up. The company's original metal products business was also mainly exported to North America and other regions. The past few years have been greatly affected by anti-corruption investigations and additional tariffs. If trade relations ease in the future, the company's original business is expected to resume.
Investment advice: After the restructuring, the company formed a metal+new energy business pattern. It is predicted that in 2024, the company will achieve a net profit of 330 million yuan, giving it an “increase in wealth” rating for the first time.
Risk warning: Competition causes decline in profitability, international trade risks and seasonal fluctuations, and old business fluctuations