Diversified businesses are developing rapidly, and revenue and profit are growing at the same time
The company was injected with assets from the Guangdong Academy of Electrical Technology. Currently, its main products are energy storage system technical services, test, testing and commissioning services, intelligent power distribution equipment, intelligent monitoring equipment, robots and drones. In '23, the company achieved revenue of 2,537 billion yuan, +41.77% year-on-year; net profit to mother was 281 million yuan, +36.71% year-on-year. Considering the intensification of competition in the energy storage industry and the pace of business expansion for some new products is slower than expected, we revised the company's net profit from 24-25 to 4.20/6.25 (previous value 7.25/11.04) billion yuan, adding an additional 26-year forecast of 837 million yuan. Referring to the average PE 18.3 times the same as the company's consistent wind forecast in 24, considering that the company relies on the South Network platform and resource advantages to build a moat, and has rich project experience and technical advantages in the energy storage and inspection and commissioning business, giving the company a 24-year target PE 40 times the target price 29.72 yuan (previous value 35.84 yuan), maintaining the “plus” rating.
Business restructuring dragged down gross profit margins, and rates remained stable during the period
The company achieved revenue of 7.26/5.82/4.42/2.58/ 275/ +31.85%/+5.04%/-7.36% of energy storage system technical services/intelligent power distribution equipment/intelligent testing equipment/robots and drones in 23 years, respectively. The company achieved a gross profit margin of 28.98%/11.19% in '23, a change of -0.68/-0.31pct compared to '22. The decline in gross margin and net margin was mainly due to an increase in the share of energy storage businesses with low gross margins; overall sales/management/R&D/finance cost ratios were 16.29%/7.37%/6.41%/-1.14% in 23, respectively. Compared with changes of -0.07/-0.88/+0.36/-0.37/+0.82pct, the rate remained stable during the period.
Benefit from large-scale development of energy storage and build a moat with resource advantages
The company's energy storage business revenue in '23 was 726 million yuan, +123.21% over the same period, accounting for an increase of 28.62% of revenue. The gross margin increased by 3.08 pct, mainly due to the higher gross margin of individual large-scale projects and the increase in overall gross margin. The company has accumulated many years in the field of energy storage system technology services, and the cumulative scale of energy storage system integration exceeds 1 GWh. In March 2023, the “Guangdong Province's Guiding Opinions on Promoting High-Quality Development of New Energy Storage Industries” was issued, which clearly states that by 2025, the revenue of the new energy storage industry in the province will reach 600 billion yuan, an average annual increase of more than 50%, and the installed capacity will reach 3GW. The company relies on the excellent resources of the Southern Network, has mastered the core technology of energy storage systems, and has rich experience in project implementation. It is expected that it will continue to benefit from the large-scale development of the energy storage industry in the future.
The business blossomed a lot, and the acquisition of subsidiaries expanded business outside the province
Revenue from test, testing and commissioning services in '23 was +64.73%, and the newly acquired subsidiary brought an increase; gross margin was 4.59pct year over year, mainly due to the high material costs of some projects and the low gross margin of the project. Revenue from intelligent power distribution equipment was +31.85% year over year, and gross margin was +8.27pct year over year. Revenue from the company's self-developed iNOS system and core modules increased dramatically, and gross margin increased significantly. The robot and drone business revenue was -7.36% year-on-year, and the gross margin was -2.85pct year over year. This is a change in the annual procurement cycle for core customers. The overall procurement scale declined slightly; the gross margin of ancillary facilities such as autonomous drone airports and charging cabinets declined.
Risk warning: Competition in the industry intensifies, downstream customer capital expenditure cuts, and new business development falls short of expectations.