A strategic cooperation framework agreement was signed with Gangdi Technology to continue to expand the industry and maintain the “buy” rating. Recently, Baoxin Software and Wuhan Gangdi Technology signed a strategic cooperation framework agreement in Wuhan, marking the formal establishment of a strategic partnership between the two companies. Gangdi Technology is a high-tech enterprise focusing on the field of industrial automation and a national-level specialized and innovative “little giant” enterprise. Its products mainly include automated driving products, intelligent control systems, and management system software. It has deep industry experience in the port and hoisting machinery field. Its inverter products enjoy a high reputation in the market. The inverter products for shield machines currently rank first in the domestic brand. Baoxin Software's high-performance open PLC has developed rapidly in the steel industry in recent years. We believe that the cooperation between the two is expected to help Baoxin Software achieve localization and expansion in the port, metallurgy and cement industries. We maintain our estimated net profit forecast for 2024-2026 at 30.2/38.3/50.6 billion yuan, corresponding EPS of 1.26/1.59/2.10 yuan, respectively. The current stock price corresponds to PE of 30.9/24.4/18.4 times. Considering that this year is expected to be the year when the scale of the company's localization projects hits, localization orders are expected to achieve high growth and maintain the “buy” rating.
As a private steel group, Hongwang Group has used Baoxin's domestic products many times to fully demonstrate its recognition of the company. Hongwang Group is an enterprise group specializing in the production of cold-rolled stainless steel, silicon steel and supporting finishing products. It is ranked 459th in the 2023 Top 500 Chinese Enterprises, 241st in the Top 500 Chinese Manufacturing Companies, and 157th of the 500 Private Enterprises in China's Manufacturing Industry. Hongwang Group and Baoxin maintain close cooperation in localization. The Hunan Hongwang base is a large-scale demonstration application scenario for Baoxin Software's self-developed PLC products to achieve full coverage of the entire cold rolling process at once. It is also currently the largest domestic control system demonstration project. The project involves 15 lines and more than 100 sets of self-developed PLCs; on the morning of March 27, 2024, Baoxin also signed a 1550 cold-rolling turnkey project with Guangxi Hongwang. The project will use the company's latest full-stack localized PLC products and a new automated digital industrial site DSF ( Digital Shop Floor) The overall solution is expected to be officially put into operation in March 2025. As a leading private steel company in China, Hongwang Group has repeatedly selected Baoxin Software's self-developed PLC products, which fully demonstrates the strong strength of Baoxin Software's localized products.
Domestic substitution with the autonomous large-scale PLC+industrial robot+AI model as the core driving force for growth is a scarce domestic enterprise with an independent large-scale PLC. Using large-scale PLC as the core to deepen the layout of localized products such as three-electric control systems, industrial robots, and AI models is expected to open up room for the company's long-term growth. We believe that as the company's localization projects are implemented one after another, the company's profitability is expected to continue to improve.
Risk warning: The promotion and application of large-scale PLCs and industrial robots fell short of expectations; promotion of localization fell short of expectations.