Event: The company publishes its 2023 annual report. During the reporting period, the company achieved revenue of 1,493 billion yuan, +22.12% year over year. Net profit attributable to mother was 173 million yuan, +198.57% year over year, net profit after deduction was 156 million yuan, up +266.79% year on year. Net operating cash flow was 253 million yuan, +11.5% YoY.
Basic earnings per share were 0.279 yuan/share, +198.08% YoY.
“Electricity” is the core, focusing on the in-depth development of the main business; innovating technology to enhance core competitive strength. The company closely follows national policies and industry trends. “One core, four directions” is the strategic plan, the “integrated power and energy service provider” is the strategic positioning, and the company's high-quality development is driven in the direction of “greening”, “intelligence”, “UHV”, and “new energy power”. Relying on 5 national innovation R&D centers and 5 provincial innovation R&D centers, the company continuously integrates resources for research and development, continuously enhances its core competitiveness, and has been rated as a national technological innovation demonstration enterprise. The company's isolation switch products have independent R&D and production capabilities of various cutting-edge technologies such as 500kV high altitude (greater than 4000 m), 750kV AC ultra-high voltage, 1000kV AC UHV, ±800kV DC UHV, etc., and is at the leading level of R&D and production of high-voltage switches. In 2023, the company applied for 53 invention patents and 51 utility models; obtained 11 authorized invention patents and 44 utility models.
Deeply involved in power equipment for several years, rich business experience and superior production capacity. The company has a wide range of key projects. It has provided equipment for many national key projects, such as “West-East Transmission” and the world's first flexible DC grid project. The product sales network covers the whole country. The company actively exploited its advantages in the complete industrial chain and undertook EPC turnkey projects for 12 projects, including the Hunan 35kV Lanrongbian Comprehensive Renovation Project. The self-production rate for parts and external components is over 80%, and the processing capacity is complete. It has 2 national and 2 provincial green factories, and has established a complete green factory management system. Changgao's complete digital production workshop was rated as a “national integrated digital demonstration workshop”, and Changgao Electric's intelligent clean workshop was rated as a “benchmark workshop for intelligent manufacturing in Hunan Province”. On June 6, 2023, the company was recognized as one of the 23 “Leading Advanced Manufacturing Enterprises” in Hunan Province.
Actively promote new product market breakthroughs, and achieve steady growth in product orders. In 2023, the company achieved market breakthroughs with several new products. The 550kV GIS developed by Changgao Electric, the 10kV silicon steel distribution transformer developed by Changgao Senyuan, the 35kV inflatable cabinet and KYN61 cabinet developed and produced by Changgao Complete Group won the bid in the National Grid, Provincial Distribution Network, and State Grid headquarters respectively. New product breakthroughs have further enriched the company's product categories and enhanced the company's overall competitiveness and profitability. In 2023, the company's orders for power equipment achieved steady growth, and the three major categories of products, modular appliances, isolators, and switch cabinets, all ranked among the top in the market share of the State Grid.
Investment advice: We expect the company to achieve revenue of 19.11/23.65/2,817 billion yuan in 2024-2026, net profit to mother of 313/3.87/463 million yuan, EPS 0.50/0.62/0.75 yuan respectively, and PE 12.70/10.27/8.57 times, respectively. This is the first coverage, giving it a “recommended” rating.
Risk warning: The macroeconomy falls short of expectations, R&D progress falls short of expectations, and market demand falls short of expectations.