We are deeply involved in power electronics, and our performance is growing rapidly. The company was founded in 2007, starting with power quality products, and transformed from a single business line to four major business lines based on power electronics conversion and control underlying technology. Currently, the company mainly focuses on four major business segments: industrial power supplies (power quality+industrial power supply), NEV charging and switching services, new energy conversion equipment, and battery conversion testing equipment. The company's 2019-2023 revenue and net profit CAGR were 43%/60% respectively, achieving rapid growth. In terms of structure, the company previously used the power quality business as its basic market. In recent years, it has benefited from the rising demand in the new energy industry. The revenue share of charging piles and energy storage businesses has increased dramatically, to 34%/32% respectively in '23, making them the company's top two main businesses.

The energy storage outlet has arrived, and the growth momentum is strong. The energy storage market has broad prospects. The company has a forward-looking layout of energy storage PCS in 2012. It has more than 10 years of experience, and has a competitive advantage: 1) First-mover advantage: complete overseas qualification certification, 30-1000kW full-power range energy storage converter products have been certified by third-party certification bodies, and domestic project experience helps to obtain orders; 2) Strong product strength: the company has clear positioning, focusing on large storage and industrial and commercial scenarios. Each scenario has targeted solutions. In '23, the company's energy storage business achieved revenue of 901 million, an increase of 255% over the previous year, and achieved rapid growth.

Demand for charging is strong, and the market is rising. The company is an upstream charging pile equipment provider with core technical strength. The products focus on mid-range and high-end, leading the profitability industry. In the second half of 2021, new markets such as special vehicles and heavy trucks will be developed, and module sales will be increased to supplement profits and increase profitability. The company's development in the European market saw initial results, and became one of the first charging pile manufacturers to enter British Petroleum's Chinese supplier list. The company's charging pile business achieved revenue of 850 million yuan in '23, an increase of 99.58% over the previous year, and is expected to continue to grow in the future.

Based on power quality, performance has been steadily improving. The power quality equipment market is growing steadily, and is expected to reach 168 billion yuan in 2024, corresponding to an 18-24 CAGR of 8%. Since 2020, companies at the end of the industry have gradually been cleared, and the competitive landscape has been optimized one after another. The company ranked first in power quality on the low-voltage user side, and its profitability remained industry-leading. The business had a CAGR of 25% in 20-23, which is higher than the industry's growth rate, and is expected to continue to contribute to performance.

Battery formation testing: binding to downstream customers, stable business volume. The company's products have a wide range of applications, basically covering all models in production lines and laboratories, and binding many medium and large customers in the industry. Overseas battery factories' production capacity continued to expand in 23 years. The company's battery testing and volumization equipment achieved overseas sales revenue in 23, and will continue to expand overseas sales channels and opportunities in 24, maintaining the trend of contrarian growth in the industry's downward cycle.

Investment advice: The company's strategic layout is forward-looking, the product competitiveness is outstanding, the four major business lines go hand in hand, the energy storage+charging pile business is starting up, the basic power quality market is stable, battery conversion testing is tied to downstream customers, and the overall performance is highly deterministic. We expect the company to achieve revenue of 36.23/48.94/6.516 billion yuan in 2024-2026, with growth rates of 36.7%/35.1%/33.1%, respectively; net profit to mother of 5.53/7.34/ 984 million yuan, respectively, with growth rates of 37.3%/32.6%/34.1%, respectively. The April 12 stock price corresponds to PE multiples 16x/12x/9x.

Covered for the first time, with a “recommended” rating.

Risk warning: Risk that the introduction of energy storage policies falls short of expectations; risk of rising prices of upstream raw materials; risk of supply chain shortages; increased risk of market competition.