The winning bid amount for modular electrical transformers increased dramatically over the same period last year, and the first equipment leader benefited from the acceleration of power grid construction. The growth rate of national power grid investment has continued to increase in recent years. In 2023, the year-on-year increase was 5.4% to 5275 billion yuan, and the growth rate increased by 3.4 pcts, achieving the fourth consecutive year of growth. The State Grid plans to invest more than 500 billion yuan in 2024, and power grid investment is expected to remain high. In terms of State Grid bidding, the total amount of substation equipment won for power transmission and transformation projects in 2023 reached 71,321 billion yuan, an increase of 30.22% over the previous year. The number of winning bids was 4,293, an increase of 15.37% over the previous year, and the winning single package amount was 16.61 million yuan, an increase of 12.84% over the previous year.
Among them, combined appliances and transformers accounted for 24.16% and 21.67% of the bid amount respectively, up 49.25% and 26.09%, respectively. As the country's leading primary power equipment, the company fully benefited from the acceleration of national main network construction. In 2023, the company won the bid amount for substation equipment for power transmission and transformation projects of 5.394 billion yuan, an increase of 71.35% over the previous year, with a market share of 7.56%, ranking first. The largest bid amount and number of winning companies were ahead of all listed companies. Among them, modular appliances and transformers won bids of 26.25 billion yuan and 1,910 billion yuan respectively, up 69.98% and 82.30% year-on-year respectively, with market shares of 15.23% and 12.36% respectively, ranking 2nd, after Pinggao Electric and TBEA respectively, and the company's leading position is remarkable. As the installed capacity of new energy continues to grow rapidly and the demand for power grid construction continues to rise, the bid amount of substation equipment for the company's power transmission and transformation projects may continue to grow.
UHV welcomed the peak of approval, and the company's AC and DC lines went hand in hand. AC/DC UHV are all essential components for constructing a new type of power system. While strengthening point-to-point transmission capacity through DC transmission lines, it is also necessary to enhance the reliability of the AC grid. The two complement each other. It is expected that AC/DC UHV will advance in parallel in the future. In 2023, the State Grid UHV project completed the bidding and procurement process for the “2 transmission 4 direct” new UHV project. The bid amount for 6 UHV equipment reached 40.523 billion yuan. Among them, the company can supply 1000 kV combination appliances and transformers for AC UHV, and provide converter converters and converter valves for DC UHV. It is one of the few listed companies in the country that can simultaneously provide key core equipment for AC and DC UHV. In 2023, the company won a bid amount of 7.93 billion yuan for UHV projects, of which the converter and converter valves won the bid of 36.94 billion yuan and 970 million yuan respectively, with market shares of 25.42% and 19.52% respectively. The country is expected to approve 4 or more DC UHV projects again in 2024, and the company's winning bid for DC UHV projects is expected to remain high. In addition, the company's self-developed IGCT technology can be used for UHV flexible converter valves. Compared with traditional IGBT solutions, it has advantages such as higher device pressure resistance, larger capacity, and lower loss. The manufacturing cost of related new converter valves may be reduced by more than 30%, and the gross margin and market share of the company's converter valves are expected to increase.
Profit forecast: In 2023-2025, the company's revenue is expected to be 18.744/234.65/28.407 billion yuan, net profit to mother of 718/10.00/1,327 million yuan, EPS 0.14/0.20/0.26 yuan, corresponding PE 38.04/27.32/20.58 times, respectively. First coverage, giving a “buy” rating.
Risk warning: Grid investment falls short of expectations, and UHV progress falls short of expectations.