Incident: The company released its 2023 annual report, achieving full year operating income of 1,122 million yuan (+10.17%); realized net profit of 210 million yuan (+18.05%); and realized net profit of non-return to mother of 184 million yuan (+18.99%).
Product lines are progressing steadily, and gross margins are continuously optimized. The company's core products achieved revenue of 4.96 (+8.42%), 3.57 (+20.16%), 1.06 (+6.54%), and 112 million yuan (+5.75%), respectively, for power monitoring and integrated substation testing, energy efficiency management, energy efficiency management, fire and electricity safety, and electricity sensors, showing a steady development trend. Thanks to the company's vigorous promotion of EMS 2.0 systems, the growth rate of energy efficiency management products is relatively fast. The increase in the share of 2.0 system software also led to continuous optimization of gross margin. The company's gross margin reached 46.39% in '23, an increase of 0.24pct over the previous year. Among them, the gross margins of power monitoring and substation inspection systems and energy efficiency management systems were 46.86% and 46.77% respectively, up 0.07 and 0.13pct, respectively.
The overseas business is growing rapidly and is expected to usher in rapid volume. The company took the initiative to target overseas markets and accelerate expansion in 23 years, mainly in Southeast Asia, Europe and other places. Revenue from overseas in '23 was 33.11 million yuan, an increase of 128.10% over the previous year. At the same time, the gross margin of overseas business reached 66.98%, far higher than 45.76% of domestic business. As an advanced electricity management model, microgrids are currently being popularized and promoted at home and abroad.
The company's products have a clear price advantage over overseas competitors. Under the company's strategic policy of vigorously expanding overseas business, future revenue from overseas is expected to increase rapidly.
Smart grid-related policies are frequent, and microgrid products are expected to benefit. Since 2024, the National Development and Reform Commission, the Energy Administration and other departments have successively issued grid-related policies such as “Guiding Opinions on Strengthening Capacity Building for Power Grid Peak Shifting and Energy Storage and Intelligent Scheduling” and “Guiding Opinions on the High-Quality Development of Distribution Grids under the New Situation” to promote the construction of a flexible and intelligent grid scheduling system. The company is currently piloting EMS 3.0 products. Its core is to combine energy data with AI to achieve intelligent energy management and flexible interaction between source network load storage resources under different goals. Against the backdrop of recent frequent smart grid-related policies, the company's EMS products are expected to develop rapidly.
According to the 23 annual report, the company's operating income was lowered, the company's period expenses were lowered, and the earnings forecast per share for 24/25 was 1.22 and 1.63 yuan (previous values were 1.38 and 1.75 yuan), and the additional earnings forecast per share for 26 years was 2.03 yuan.
Referring to the 24-year price-earnings ratio of comparable companies, the target price was 28.06 yuan, maintaining the purchase rating.
Risk warning
Risk of falling gross margin; risk of increase in the size of accounts receivable; risk of other returns falling short of expectations; risk of increased market competition; risk of market penetration falling short of expectations