On October 31, 2023, China Southern Power Grid Corporation and the Open Atom Open Source Foundation jointly released the first domestic power IoT operating system, Dianhong IoT Operating System (“Electric Power Hongmeng OS”) in Beijing. For the first time, the system achieved unified coverage of different types and brands of power equipment, realized mass data interconnection, provided an important foundation for large-scale IoT equipment access and operation and maintenance of future new power systems, and filled the technical gap in this field in China. As an important ecological partner of the Dianhong IoT operating system, the company provides self-developed PLC power line communication chip technology support to help upgrade the entire industry chain.
“Electric Power Hongmeng OS” was created in response to the industry's pain points. Previously, domestic IoT operating systems showed a state of “fragmentation”. The specifications, protocols, and security of various operating systems were different. As the interaction between supply and demand of distributed new energy sources and load terminals gradually increased, there was an urgent need for a unified operating system. Power Hongmeng OS is tailored for the power industry. Through a unified framework, different power devices can achieve intelligent, interconnected and collaborative work. While improving data processing capabilities, it can also maintain the balance between electricity consumption and power generation in real time, and reduce the work pressure of grassroots operators and maintenance personnel. After the release of Electric Power Hongmeng OS, it is expected to open a new era of power equipment interconnection; the full promotion of “Electric Power Hongmeng OS” will benefit the company deeply. Smart Micro Power Line Communication (PLC) series chips, communication modules and application solutions enable “last mile” communication in the IoT market, widely used in industrial and consumer IoT applications such as smart grids, integrated energy efficiency management, smart photovoltaics, battery management, smart lighting, and smart homes. “Electric Power Hongmeng OS” currently has more than 100 partners, covering mainstream domestic chip, module, and terminal manufacturers. It is expected that by the end of 2024, the industrial chain will expand to more than 900 sub-devices to achieve full coverage of 135 IoT terminals in the transmission and distribution sector. By the end of 2025, the coverage of terminals can exceed 100 million; in the future, as “Electric Power Hongmeng OS” is applied to more IoT terminals, the company will benefit deeply as a core chip supplier.
The company's power IoT market business continues to grow. In the first three quarters, the company achieved operating income of 448 million yuan, an increase of 28.25% over the previous year, and achieved net profit of 81 million yuan, an increase of 58.30% over the previous year; the company's profitability continued to increase. The company's gross margin in the first three quarters was 40.50%, up 0.48 pcts year on year, and the net interest rate was 18.15%, up 3.45 pcts year on year. On the other hand, the company's on-hand orders also increased steadily. As of September 30, 2023, the company's on-hand orders were close to 185 million yuan, an increase of 11.41% over the same period last year.
First coverage, giving a “buy” rating. The company's revenue for 2023-2025 is estimated to be 6.2/7.8/980 million yuan, net profit to mother is 108/1.37/173 million yuan, respectively, and the corresponding PE is 33.53/26.45/20.94, respectively.
Risk warning: The development of “Electric Power Hongmeng OS” falls short of expectations, and the procurement of power grid equipment falls short of expectations;