Key points of investment:
Q1 The performance was in line with market expectations, and the growth rate slightly exceeded expectations after deducting non-growth
2024Q1 achieved revenue of 1.3 billion yuan, +0.6% over the same period (based on the company's average order delivery time of 9 months, the 23Q1 delivery order pushed back to the high point where raw material prices were raised, and the corresponding order product price was also relatively high; at the same time, last year Q1 benefited from the high growth rate of new energy sources, and the base was high). Q1 achieved net profit of 95 million yuan, +8.6% year over year, and realized net profit of 100 million yuan without return to mother, +36.7% year over year (the net change was mainly hedging profit and loss of -014 million yuan in 24Q1. Changes in accounts receivable balances and credit status improvements led to a year-on-year decrease in credit impairment losses).
The share of overseas revenue has increased, and gross margin has improved markedly
The gross margin increased to 25.39%, +2.7 pct year over year and +0.94 pct month over month, mainly due to an increase in overseas revenue share (Q1 overseas revenue reached 388 million yuan, accounting for 30%; 2023H1 overseas revenue accounted for 18.4%). On April 18, the company disclosed that it had signed multiple contracts with overseas customer E, one of its main EPC partners, to supply various types of transformers, with a cumulative contract amount equivalent to approximately RMB 739 million. In the future, driven by demand from overseas manufacturing, computing power infrastructure, and new energy sources, etc., the growth rate of overseas revenue and orders is expected to continue to lead the country, driving the profit level forward.
The digital business has accumulated and underdeveloped, and the order harvest period has begun
The overall digital solution achieved revenue of 57 million yuan. On April 12, the company revealed that Guangzhou Tongxiang signed a contract with customer D for the digital factory project, which included the design, procurement, transportation, handling, installation, implementation, commissioning and delivery of the project's special aircraft equipment/digital production line/system software. The contract amount was close to 300 million yuan (tax included). In the early stages, the company gradually cultivated user mentality and sorted out the brand image through its own digitalization and intelligent upgrading, and active promotion to the outside world, and digital orders will enter a period of fulfillment and harvest.
Profit forecasting and investment advice
We expect the company's net profit to reach 75/11.25/1,414 million yuan in 2024-2026 (the previous forecast was 7.7/1.13 billion yuan, mainly considering that digital orders were delayed until centralized signing in 2024, and related revenue was delayed in confirmation), and the current market value corresponding to PE is 28/19/15 times. We believe that the company is a leader in the scarcity of power equipment overseas. Entering the order harvest period, the digital business will fully benefit from global power system upgrades and manufacturing upgrades. The company will be given a certain premium, 35 times PE in 2024, corresponding to a target price of 60.88 yuan/share, and maintain a “buy” rating.
Risk warning
Fluctuations in global demand for transformers led to orders falling short of expectations, fluctuating raw material prices and changes in order structure, transformer gross margin falling short of expectations, energy storage industry demand falling short of expectations, and digital factory business development and delivery falling short of expectations.