Event Overview:
Recently, Langxin Group released the “2023 Annual Report”. In 2023, the company achieved operating income of 4.727 billion yuan, up 3.86% year on year; net profit to mother was 604 million yuan, up 17.44% year on year; net profit after deducted from non-return to mother was 533 million yuan, up 33.64% year on year; and net cash flow from operating activities was 658 million yuan, up 108.21% year on year.
The energy digitization business has a solid foundation, focusing on improving the quality and efficiency of power grids
According to the annual report, Langxin Group's power grid-related energy digitization business maintained a good development trend in 2023, achieving revenue of 2,321 billion yuan, accounting for 49.10% of total revenue, an increase of 7.49% over the previous year, and a gross profit margin of 40.34%, an increase of 2.3 percentage points over the previous year, and the basic market business continued to rise steadily. The company completed the launch of the marketing 2.0 system in Shanghai, Shanxi, Hubei, Hebei, Henan and other provinces, built and upgraded load control systems based on different load attributes and scenarios on the user side; formed rich solutions around hot topics such as marketing optimization, load forecasting, and carbon emissions in the field of energy big data, and strengthened exploration and development in combination with big models. In 2024, the company plans to continuously improve the revenue and profitability of the energy digitization business through software applications, digital services and business operations around the hot demand for comprehensive digital transformation of power grids.
The energy Internet business is growing rapidly, and there are considerable opportunities for various industries
In 2023, Langxin Group's energy internet business achieved revenue of 1,534 billion yuan, an increase of 38.97% over the previous year. During the reporting period, the company's lifestyle payment business had a cumulative total of over 450 million service users, more than 14 million daily active users, and more than 6,200 connected public service payers, maintaining a growing trend and leading position in the market; the company's “New Telecom” converged charging platform business maintained rapid development. By the end of 2023, the platform's charging equipment coverage exceeded 1.1 million, the number of registered platform users exceeded 11 million, and the aggregate charging volume reached 4 billion kilowatts in 2023, doubling the year-on-year growth rate and further increasing the public charging market share.
Facing various new opportunities and trends in the energy Internet field, such as “vehicle energy road cloud”, virtual power plants, and market-based electricity transactions, the company is actively laying out a new growth curve. It successfully won the bid for the Wuhan Donghu Project to provide customers with services such as integrated traffic management platform construction, intelligent parking transformation, intelligent charging pile system construction, and community parking lot data management. While building a benchmark case based on this project, it is expanding the market in many provinces and cities; the PV cloud platform is newly connected to about 140,000 distributed photovoltaic power plants with a capacity of about 4 GW. Through the aggregation of resources such as distributed photovoltaic power plants, charging piles, energy storage, industrial and commercial customers, etc., it participated in market-based electricity sales, power auxiliary services, demand-side response, and green electricity polymerization transactions in many provinces. By the end of the reporting period, the company had obtained power sales licenses in 25 provinces, and obtained demand response or virtual power plant qualifications in Jiangsu, Sichuan, Guangdong, Shenzhen, etc. The annual power transaction contract exceeded 250 million degrees, and the capacity of the integrated green power transaction exceeded 150 MW.
Investment advice:
As a leading enterprise in the field of power and energy digitalization in China, Langxin Group is continuously transforming and upgrading from business-driven to technology-driven, project-based to platform-based, service-oriented to operational, and from energy technology to technological energy. At the same time, the company will completely shrink in non-strategic business areas, reduce non-strategic losses, and strengthen the company's strategic focus. The company is expected to achieve operating income of 54.73/64.77/7.80 billion yuan in 2024-2026; net profit to mother of 7.09/8.15/885 million yuan. Maintaining the buy-A investment rating, the 6-month target price is 16.32 yuan, which is equivalent to 25 times the dynamic price-earnings ratio in 2024.
Risk warning:
The construction of electricity informatization fell short of expectations; the progress of electricity marketization fell short of expectations.