Net profit due to mother increased by 10-35%, maintaining a “buy” rating
The company announced its 2023 annual performance forecast. It is expected to achieve net profit of 180-230 million yuan, a year-on-year increase of 10%-35%, a year-on-year increase of 17%-217 million yuan, a year-on-year increase of 15%-40%; 23Q4 single-quarter net profit of 0.14-056 million yuan, a year-on-year change of -57.01% to 75.92%, net non-return profit of 0.16-0.54 billion yuan, a year-on-year change of -47.83% to 79.98%. The company continues to promote product upgrades and strengthen cost control. It is expected to achieve dual optimization of gross margin and expense ratio, and profitability is expected to increase.
EPS is expected to be 0.99, 1.45, and 2.09 yuan respectively in 23-25. Referring to the comparable company 24E 15.8xPE (Wind), considering that the company's software business advantages and product competitiveness are becoming more prominent, the company will be given 24E25x PE, corresponding to a target price of 36.25 yuan (previous value 37.79 yuan), maintaining the “buy” rating.
2.0 is progressing steadily, and the 3.0 pilot is being launched. Product upgrades drive gross margin improvement. The company continues to promote product platform-based transformation (from EMS 1.0 to EMS 2.0 and 3.0), driving the continuous increase in software business share and promoting continuous optimization of gross margin levels. 1) Steady progress of 2.0:23H2 actively adjusts sales strategies, sinks some R&D personnel into the market, and helps the sales team promote 2.0 products to drive the steady growth of EMS 2.0 products; 2) 3.0 pilot launch: EMS 3.0 further increases the integrated optical storage and charging platform and AI operation strategy, and the proportion of software has increased again compared to EMS 2.0. As of 23Q3, the company has completed more than ten pilot projects, and product capabilities have been verified. We believe that with the increase in sales share of EMS 2.0 and 3.0, gross margin is expected to continue to be optimized in 24 years.
Overseas business development is going well, and I am optimistic that it will continue to expand for 24 years
The company continues to expand overseas markets such as Southeast Asia, Europe, the Middle East, Africa, and North America around businesses such as energy internet platforms, source network storage and charging platforms, and the company's traditional products. In 2023, the company stepped up its efforts to develop overseas markets, and accelerated the completion of projects in Europe, Southeast Asia and other regions by participating in overseas exhibitions, visiting customers, and developing local agents. Considering that overseas customers are more sensitive to energy consumption control needs, and that the company's 23 years of overseas project experience is expected to be replicated and promoted, we believe that the scale of the company's overseas business is expected to continue to increase in 24 years, and the coverage of the business area is expected to expand further.
The “Electric Power Quality Management Measures (Interim)” were released, and industry demand is expected to be released at an accelerated pace. The National Development and Reform Commission reviewed and approved the “Electric Power Quality Management Measures (Interim)” (hereinafter referred to as the “Management Measures”) on December 26, 2023, and will be officially implemented on April 1, 2024. The management regulations emphasize that power quality management should follow the policy of “standard guidance, prevention first, and comprehensive management”, and that treatment equipment and online monitoring devices should be designed, constructed, inspected, and put into operation at the same time as the main project.
Currently, the company has mastered the three major product layouts of online monitoring devices, control devices, and management systems around power quality management. The product base is good, and it is expected that it will fully benefit from the increase in demand brought about by the implementation of the policy. We believe that in the future, as the share of new energy sources increases, the demand for load-side management will become more and more prominent, the need to build a company's microgrid management system will further increase, and there is plenty of room for long-term growth.
Risk warning: New power system construction falls short of expectations; platform products fall short of expectations.