Changgao Dianxin focuses on the power equipment and engineering sector to stabilize operations:
Changgao Electronics was established in 1998. Its main products include primary and secondary power equipment products such as high voltage isolators, combined electrical appliances, circuit breakers, complete switch cabinets, ring network cabinets, column circuit breakers, power distribution automation terminals, etc., as well as power design and engineering services, and new energy power development.
Transmission equipment continues to be produced with new products, which is expected to gain a larger share:
The company's transmission equipment products include disconnectors, combined electrical appliances and complete equipment. The isolation switch is the company's best product, and it is in the lead with Siyuan Electric, Shandong Taikai, and Pinggao Electric in the State Grid tender. Combined appliances continue to expand high-voltage grade products. 550kv combined appliances obtained type test reports in 2022 and won the bid in 2023. Complete equipment products have launched new products such as amorphous alloy transformers and environmentally friendly gas ring network cabinets, leading to an increase in future orders.
The engineering business has come out of trouble, and the risk of impairment of goodwill has basically been released:
In order to give full play to its collaborative advantages in the field of power transmission and distribution, the company entered the field of power design and engineering contracting through independent establishment and acquisition. The acquisition of Hubei Huawang Electric Power Engineering Company totaled 246 million yuan in goodwill. Affected by Hubei Huawang's losses, the goodwill impairment was calculated. By the end of 2022, Huhubei Huawang's net goodwill value remained of 25.9504 million yuan, and the goodwill risk has basically been released.
Investment advice:
We expect the company's revenue from 2023 to 2025 to be 1,50/ 2,683 billion yuan, respectively, with growth rates of 23.2%/22.8%/45.0%, and net profit of 1.79/3.09/445 million yuan, respectively. Growth rates are 206.2%/71.9%/44.1%, respectively, with outstanding growth. Referring to comparable companies in the power grid equipment industry, the PE of comparable companies in 2024 was 21 times. Considering the gap between the company's current revenue volume and market share and comparable companies, the company was given 15 times PE in 2024, with a target price of 7.50 yuan for 6 months, and an investment rating of buy-A.
Risk warning: grid investment falls short of expectations; progress of new product development falls short of expectations; engineering business development falls short of expectations; risk of credit impairment.