Incident: Times Electric released its 2024 quarterly report, with impressive performance growth. In the first quarter of 2024, the company achieved revenue of 3,925 billion yuan, yoy +27.20%; net profit to mother of 568 million yuan, yoy +30.44%, gross profit margin of 34.06% in the single quarter, an increase of 1.64pct over the previous year. Looking at the revenue structure, 2024Q1's rail transit business and emerging equipment business achieved revenue of 21.2/1.77 billion yuan respectively, up 43.7%/13.2% year-on-year respectively, accounting for 54.0%/45.1% of revenue respectively. We believe that based on the continuous improvement of the two core businesses of rail transit and emerging equipment, the company's 24Q1 performance maintained a remarkable growth rate.
The results in 2023 reached a record high. Times Electric announced its 2023 annual results. In 2023, it achieved revenue of 21.799 billion yuan, yoy +20.88%, net profit to mother of 3.106 billion yuan, yoy +21.51%, and a comprehensive gross profit margin of 34.06%, an increase of 1.17pct over the previous year. Among them, 2023Q4 achieved revenue of 7.704 billion yuan, yoy +7.62%, net profit to mother of 1,053 billion yuan, yoy +5.98%, and gross profit margin of 36.51% in a single quarter, an increase of 4.69pct over the previous year. In 2023, the company's revenue and net profit to mother reached record highs. Among them, 2023Q4 single quarter revenue and net profit to mother hit record highs in a single quarter.
Railway demand is recovering steadily, and rail transit equipment revenue continues to pick up. In 2023, the company's rail transit equipment achieved revenue of 12.91 billion yuan, +2% over the same period last year. While consolidating its market position, the company is actively developing new markets: according to RT rail transit network data, in 2023, the company won the bid for 3,382 of the 6340 subway traction conversion system orders, accounting for 53.34%, leading the industry for 12 consecutive years; the CR450 EMU completed high-speed performance tests, setting many speed records, and successfully tested autonomous driving for 20,000 ton domestic heavy-duty trains, pushing China's autonomous trains into the “fully autonomous era”; the company's urban rail signal business won bids for 5 lines throughout the year, reaching a record high. Both subway signal systems have achieved first-order breakthroughs; in addition, key breakthroughs in power supply system integration have been achieved in the Chongqing Metro, and the winning bid amount for the door sector business has increased dramatically.
Emerging equipment has accelerated breakthroughs, and the market share in various fields is in the top three. In 2023, the company's new equipment achieved revenue of 8.732 billion yuan, +69.6% year-on-year. According to NE Era data, the company performed well in various fields in 2023, including: passenger car power modules entered the top three in the industry, with a market share of 12.5%; IGBT module delivery had the highest market share in the country in rail transit and power grids; 248,000 new energy passenger vehicle electric drive systems were installed throughout the year, ranking in the top six in the industry. According to International Energy Network/PV Headline statistics, the company's photovoltaic inverter business signed 18.6 GW of new domestic orders, rising to the top three for the first time; the sensor business built 39 new production lines, ranking first in the domestic market share in the rail transit sector, and the leading position in the industry in the fields of new energy vehicles, wind power, and photovoltaics; the domestic offshore equipment market signed several new orders, and heavy deep-sea trenching equipment successfully launched to fill the domestic gap.
Performance forecast and investment suggestions: We expect Times Electric 2024E/2025E/2026E to achieve operating income of 275.0/327.5/38.40 billion yuan, yoy 26.2%/19.1%/17.3%; net profit to mother of 38.0/44.0/4.89 billion yuan, yoy 22.3%/15.9%/11.0%; corresponding to the current PE valuation of 18.6/16.0/14.4x. As the company is in a period of rapid performance growth, the market share of the two core businesses will stabilize and improve in the future It may show a steady growth trend and be upgraded to a “Highly Recommended” rating.
Risk warning: Downstream demand falls short of expectations, technology iteration falls short of expectations, and market competition increases risk.