Key points of investment:
The company released the 2023 performance report: In the context of the construction of the Zhejiang Preisai Power Protection Slowdown Project, it actively expanded market channels outside the province, promoted new product applications, and achieved revenue of 202 million yuan, an increase of 6.28% over the previous year. Due to the company's continuous technological changes and innovation and expansion of new business, pre-investment in R&D increased, achieving net profit of 46 million yuan, a year-on-year decrease of 18.57%, and net profit without deduction of 38 million yuan, a year-on-year decrease of 1.55%.
Diligent internal work consolidates technical strength and is deeply involved in smart grids: In November 2023, the company was recognized by the Zhejiang Provincial Science and Technology Department as the Provincial Key Enterprise Research Institute (Zhejiang Key Enterprise Research Institute for New Power System Numerical Sensing Technology); the company's “Key Technical Equipment and Engineering Application for Field Volume Control of Flexible DC Transmission Transformers” and “Health Status Sensing Technology and Intelligent Complete Equipment Development and Application for Large Power Transformers” were awarded the first and second prize of the 2023 “Machinery Industry Science and Technology Award” jointly issued by the China Machinery Industry Federation and the Chinese Society of Mechanical Engineering.
Leveraging the advantages of technical resources to develop grid-side user-side energy storage: The company continues to promote new energy storage businesses with the Internet of Things and big data technology accumulated across all links and voltage levels in the smart grid field, as well as rich experience in integrating electrical and mechanical systems. In November 23, it was announced that a 2 GWh energy storage product production line project will be built (implemented by the wholly-owned subsidiary Hangzhou Colin New Energy), which will be deployed to distributed energy storage on the user side and the power grid side. On November 2, the company unveiled the Energy Carrier and EnergyCruiser series products at the SNEC Shanghai Energy Storage Exhibition. The next-generation liquid-cooled energy storage module passed the UL9540A thermal loss safety assessment.
The forward-looking layout of the perovskite production line was selected for the provincial “Jianbing Lingyan+X” project: In November 2023, the company announced the 100MW pilot line construction project for perovskite solar cells (constructed by the holding company Hangzhou Keneng New Energy, with the company holding 60% of the shares), with an investment of 220 million yuan and an estimated annual output value of 200 million yuan. The company has set up a technical team, introduced high-end technical and management talents in the field of perovskite, signed a “Joint Laboratory Co-Construction Cooperation Agreement” with an authoritative research institute on November 20, and carried out technical cooperation with senior university teams. In December, the company's “Key Technology for High-efficiency New Flexible Perovskite Thin Film Photovoltaic Cells” project was approved by the 2024 “Jianbing Lingyan+X” R&D Research Plan project issued by the Zhejiang Science and Technology Department.
Profit forecasting and investment suggestions: The company is deeply involved in smart grids, has accumulated software and hardware technology for energy management and digital twins, and plans strategic changes for integrated source grid storage in the context of energy system transformation. I am optimistic about the expansion of the company's main smart grid business outside the province, the increase in penetration rate, and the volume of new energy storage and new photovoltaic businesses. We expect the company's net profit for 2023-2025 to be 0.46/131/169 million yuan (the previous forecast was 140/2.25/293 million yuan, mainly due to the high price of lithium carbonate in 2023, the economy of energy storage has not yet highlighted lagging demand, and smart grid demand falls short of expectations due to macroeconomic and regional planning). Using the comparable company valuation method, the average PE ratio for comparable companies in 2024 was 20.4 times. We believe that the company's forward-looking layout of new energy storage/perovskite technology is expected to benefit more from the high demand in the industry. The company will be given a certain premium, 25 times PE, corresponding to a target price of 41.93 yuan, and maintain a “buy” rating.
Risk warning:
Demand for energy storage, smart grid construction falling short of expectations, uncertain new technology routes, etc.