Core views:
The company is a State Grid digital intelligent service provider. The company, formerly known as Minjiang Hydropower, completed major asset restructuring in 2019 and transformed the power information and communication business. The company's main business includes cloud network infrastructure, electricity digitization services and enterprise digitization services. According to the performance report, in 2023, the company achieved revenue of 8.039 billion yuan, +5.6% year-on-year, and net profit to mother of 836 million yuan, +4.3% year-on-year.
Digitalization of power grids opens up space for new energy consumption, and the company welcomes good opportunities for development. The pressure to consume new energy sources continues to increase, and the digital intelligence of power grids is a key part that is ahead and needs to be accelerated urgently. The State Grid and the Southern Grid are speeding up the construction of digitally intelligent power grids. The State Grid proposes to build a strong digitally intelligent power grid, and the South Grid proposes to fully complete the digital transformation by 2025. According to the State Grid e-commerce platform, the winning bid amount for the State Grid headquarters digitization project increased from about 6.5 billion yuan in 2021 to about 9.3 billion yuan in 2023 (all provinces also conduct digital tenders, and the scale is larger than headquarters collection), and the winning bid amount for equipment and services increased simultaneously. The company won the bid share, with an overall market share of 16% in 2023.
By business sector: (1) Cloud network infrastructure: large-scale development of communication and computing power infrastructure.
The company's communication network construction business provides network integration services for the State Grid, leading the network share. The computing power infrastructure is centered on data center construction, and the company's business is spread all over the country; (2) Digital power services: marketing 2.0 contributions have continued to grow. Since 2020, the electricity marketing 2.0 system has gradually been launched on the State Grid. The company's subsidiary CLP Prva will complete the promotion and launch of 17 provincial companies belonging to the State Grid Corporation by the end of 2023, and plans to complete the promotion and application of the remaining provincial and municipal companies in 2024. The energy transaction+load side business is expected to become a new growth point. (3) Enterprise digitalization services:
In the context of the development of Xinchuang, the digital demand for enterprises inside and outside the network continues to grow.
Profit forecast and investment advice: The company's net profit to mother for 2023-2025 was 836/10.41/1.299 billion yuan, a year-on-year growth rate of 4.3%/24.5%/16.2%. Refer to comparable company valuation levels, consider the development opportunities brought by digital intelligence, and give the company a net profit of 25.0 x PE in 2024, corresponding to a reasonable value of 21.64 yuan/share. First coverage, giving a “buy” rating.
Risk warning: grid investment falls short of expectations; risk of reliance on key core customers; risk of maintaining technical advantages.