Incident: The company announced its 2023 annual results forecast. In 2023, it is expected to achieve net profit attributable to shareholders of listed companies of 450 million yuan to 500 million yuan, an increase of 69.6% to 88.5% over the previous year; net profit after deducting non-recurring profit and loss is 440 million yuan to 490 million yuan, an increase of 72.1% to 91.6% year on year.

New energy and new infrastructure products are outstanding, and demand from downstream customers is strong. The company's products cover transmission, distribution and control equipment, including box-type substations, complete switchgear and transformers, covering photovoltaics, wind power, data centers, smart grids and other industries. The company's production side has strong intelligent manufacturing capabilities, a stable supply chain level, high production efficiency, rapid response to product updates and iterations, stable operation in harsh environments, and has advantages over similar products at home and abroad. Long-term cooperative relationships have been established with downstream customers, “five big six small”, two major power grids, two major EPC units, communication operators, and energy solution service providers. Early feedback was good, further consolidating the ability to take subsequent orders.

New orders are plentiful, and the offshore business is growing rapidly. The company is a subsidiary of Mingyang Group, the largest private fan manufacturer in China. Its brother company Mingyang Intelligence is one of the top ten leading wind power equipment companies in the world, so the company entered the field of new energy electrical equipment earlier and has a first-mover advantage. Facing the complex natural environment at sea, the company combined its accumulated experience in the field of offshore wind power to launch a booster system solution suitable for offshore photovoltaic power generation application scenarios. The first batch of 66kV boosting systems independently developed by the company has been delivered, and successfully won the bid for Guohua HG14 offshore photovoltaic 1000MW project, which is currently the first GW-class high-capacity offshore photovoltaic project in the world to enter the implementation stage.

Continue to explore the high-pressure field, and broad export prospects can be expected. The company has increased R&D investment in self-developed products and broadened the product boundary to the field of high voltage. Among them, GIS, transformers and other products with 110 KV grade or above have completed product development, prototype test reports, etc., and the technical side has shipping capabilities. The company will further develop products such as higher voltage grade G1S products and 220 kV to 500 kV booster station main transformers. In terms of export layout, products are exported to more than 40 countries and regions around the world in Germany, Russia, the Philippines, Malaysia, Vietnam, Bulgaria and Ukraine.

Investment advice: We expect the company to achieve revenue of 48.64/63.74/8.406 billion yuan in 2023-2025, net profit of 4.58/6.39/865 million yuan respectively, EPS of 1.47/2.05/2.77 yuan, and P/E of 19.64/14.06/10.39 times, respectively. Covered for the first time, giving the child a “recommended” rating.

Risk warning: demand falls short of expectations; competition in the new energy industry intensifies; risk of economic fluctuations.