Key points of investment
Incident: The company released its quarterly report for '24, achieving revenue of 1,545 million yuan, +31% year on year, achieving return of 181 million yuan, +28% year over year, and achieving deductions of not 179 million yuan, or +23% year over year. In terms of profitability, 4Q1 gross margin was 33.96%, -3.2pct year on year, 11.72% net interest rate to mother, -0.34pct year on year, after deducting non-net interest rate 11.6%, and -0.73pct year on year. The results slightly exceeded market expectations.
The network business is growing steadily, and we are optimistic about the future high-quality development of distribution networks. 1) On the main network side, the company won 13% of the bid in the first batch in '24, and the share returned to second place (surpassing Nanrui Technology). The company made efforts in next-generation centralized control stations, digital twin smart substations, etc., to expand the secondary business layout of the main network, and the in-network business is expected to maintain steady growth in 24 years. 2) On the distribution side, products such as the company's first and second integration have passed tests one after another. I am optimistic that the company will expand new markets+the recovery of investment on the distribution side in '24 will create a second growth curve for the company's power grid.
The off-grid new energy market is still booming, and the layout of emerging businesses opens up long-term market space. 1) On the new energy market side, the total installed capacity of 24Q1 wind/light was 45.7/15.5GW, +36%/49%. The company is deeply involved in the field of new energy secondary equipment, and has maintained a leading position in the new energy market in the field of new energy. 2) In terms of emerging businesses, vigorously develop energy storage, actively expand new technology fields such as green hydrogen power supplies, special power supplies, and flexible interconnection systems, and open up long-term market space.
The fee-side control is good, and on-hand orders are executed smoothly. The total expenses for the 24Q1 period were 318 million yuan, +22% year over year, and the cost ratio was 20.59%, -1.56 pct. Of these, sales/management/R&D/finance expenses were 1.19/0.68/1.51/ -019 million yuan, respectively, +13%/19%/36%/-59% YoY, with good cost-side control. The company's 24Q1 year-end contract debt was 1.270 billion yuan, a decrease of 9% from the beginning of the year, and the year-end inventory was 1.89 billion yuan, a decrease of 7% from the beginning of the year, mainly due to continuous delivery of orders in progress.
Profit forecast and investment rating: We maintain the company's 24-26 net profit of 7.3/9.1/1.05 billion yuan, +17%/24%/16% year-on-year. The PE corresponding to the current price is 17x, 14x, and 12x respectively, maintaining a “buy” rating.
Risk warning: Grid investment falls short of expectations, new energy installations fall short of expectations, price wars continue, competition intensifies, etc.