The three main businesses of welding belts, energy storage, and busbars are established, and R&D plus capacity expansion will drive future growth. The company has been deeply involved in the bus line industry since 2005, and later laid out the photovoltaic welding belt and electrochemical energy storage industries in 2010 and 2022, respectively. After the welding belt business became the company's second growth pole, energy storage, especially the industrial and commercial storage business, is expected to bring new volume to the company.
Distribution equipment business: Related power distribution demand drives the steady development of the intelligent bus industry. In Q3 2023, the company's power distribution equipment revenue was +87% year over year, and bus revenue was +107% year over year, mainly due to the increase in demand for intelligent transmission and distribution driven by the growth of wind power photovoltaic installed capacity. The company is a bus supplier for companies such as Huawei and China Power Construction, and has partnerships with large enterprises to ensure steady future growth.
New photovoltaic materials business: New technology accelerates layout and accelerates development of new customers. In Q3 2023, the company's welding belt business revenue was +174% year-on-year. The company's SMBB welding belt shipments accounted for about 50%, and the share of shipments increased dramatically. The company has deployed technologies such as SMBB and low temperature welding belts ahead of schedule. It has obvious technological leadership in this field, and is currently accelerating the development of leading PV module customers, and is expected to continue to expand.
Energy storage business: Large storage accelerates volume, and industrial and commercial storage has become a new growth pole. The company accelerated the deployment of the electrochemical energy storage business in the second half of 2022. Due to strong similarities between its main power distribution business and electrochemical energy storage systems, the company rapidly drove business growth through manufacturing leadership. In Q1-Q3 of 2023, the company's energy storage business is expected to generate revenue of about 200 million yuan, which is about +178% compared to the full year of '22; it is expected to achieve revenue of 170 million yuan in a single quarter in Q3 '23, an increase of 719%. In addition to large storage, the company relied on existing customer resources and technical advantages in the power equipment industry to accelerate the layout of the industrial and commercial storage business. As the price difference between peaks and valleys in various provinces and cities widens and the economy of industrial and commercial storage continues to improve due to reduced equipment costs, it is expected to drive the company's energy storage business to grow rapidly in 2024.
Investment advice: The company's revenue for 23-25 is estimated to be RMB 28.64/45.25/6.204 billion yuan, and net profit to mother is RMB 123/2.05/313 million, respectively, and the corresponding PE is 24/14/9. The company's welding belt and energy storage business developed rapidly, and the bus line business maintained its advantages and grew steadily. It was covered for the first time, and was given a “recommended” rating.
Risk warning: Market competition intensifies; PV installed capacity falls short of expectations; energy storage market falls short of expectations.