Incidents:
The company released its 2023 annual report, achieving revenue of 2,537 billion yuan, up 41.77% year on year; net profit to mother of 281 million yuan, up 36.71% year on year; deducted non-net profit of 264 million yuan, up 36.53% year on year.
Among them, 2023Q4 revenue was 903 million yuan, up 32.04% year on year; net profit to mother was 121 million yuan, up 74.04% year on year; net profit after deducting non-return to mother was 117 million yuan, up 96.01% year on year.
The company released its 2024 quarterly report, achieving revenue of 505 million yuan, a year-on-year increase of 9.85%, and realized net profit of 42 million yuan, an increase of 38.21% over the previous year, and realized net profit without deduction of 40 million yuan, an increase of 37.19% over the previous year.
Comment:
Revenue from energy storage/testing and testing increased significantly, and business expansion outside the province is beginning to bear fruit. By product, energy storage system technology service revenue was 726 million yuan (YOY +123.11%); test, inspection and commissioning service revenue was 582 million yuan (YOY +64.73%); intelligent distribution equipment revenue of 442 million yuan (YOY +31.85%); intelligent monitoring equipment revenue of 258 million yuan (YOY +5.04%); and robot and drone revenue of 275 million yuan (YOY -7.03%). The company's robot and drone business declined slightly in 23 due to changes in the customer's annual procurement cycle, and other sectors grew significantly. Among them, revenue from businesses such as energy storage system technical services and test and testing services grew rapidly. The main reason was the implementation of energy storage projects, the scale of the grid-side test and inspection business of the company headquarters continued to expand, and the new acquisition of subsidiaries brought about business growth. By region, revenue within Guangdong Province was 1.784 billion yuan (YOY +35.32%); revenue outside Guangdong Province was 745 million yuan (YOY +63.56%). The main reason is that the company's acquisition of Guizhou Chuangxing and Guangxi Guineng Company led to business expansion outside the province.
The company's overall gross margin remained high, and energy storage profits increased year-on-year. In 2023, the company's overall gross margin was 28.98% (YOY-0.68pct); the net margin was 11.19% (YOY-2.68pct), of which the company's Q4 gross margin was 32.92% (YoY+6.08pct), and the net margin was 13.5% (YoY+3.3pct). The gross margin for Q1 2024 was 32.15%, and the net margin was 8.43%, which remained high. By sector, the gross margin for energy storage in 2023 was 14.69% (+3.08pct), the gross margin for test testing and commissioning services was 42.34% (YOY-4.59pct), the gross margin for intelligent distribution of electricity was 34.32% (+8.27pct), the gross margin of intelligent monitoring equipment was 35.48% (YOY+1.47pct), and the gross margin for robots and drones was 30.42% (-2.85pct). Among them, energy storage profits improved year-on-year, mainly due to the higher gross margin of individual large-scale projects and the increase in overall gross margin; the gross margin of intelligent distribution electricity increased significantly, mainly due to the sharp increase in revenue from the iNOS system and core modules independently developed by the company, and the sharp increase in gross margin.
With the advancement of intelligent power grids+new energy storage construction, I am optimistic that the company's 24-year performance will continue to grow rapidly.
From an industry perspective, intelligent power grids are an important construction direction for new power systems. In the first quarter of '24, the National Development and Reform Commission and the National Energy Administration issued “Guiding Opinions on the High-Quality Development of Distribution Grids under the New Situation”, which calls for continuous strengthening of distribution grid construction and further upgrading of distribution grids.
According to data from the National Energy Administration, by the end of 2023, new energy storage projects had been built and put into operation nationwide with a cumulative installed capacity of 31.39 million kilowatts/66.87 million kilowatt-hours. Energy storage is an important direction for solving the consumption of new energy sources, and there is broad scope for the future. The company is leading the power grid intelligent technology industry and has the advantage of the Southern Grid background. We expect the company's intelligent power grid+new energy storage to maintain rapid growth in 24 years.
Profit forecast and investment rating: We expect the company's 2024-2026 revenue to be 43.41 billion yuan, 62.71 billion yuan, and 8.591 billion yuan, respectively, up 71.1%, 44.5%, and 37.0% year-on-year; net profit to mother is 4.45, 6.32, and 853 million yuan, respectively, up 58.2%, 42.0%, and 35.0% year-on-year. Maintain a “buy” rating.
Risk factors: Increased market competition, grid investment falling short of expectations, risk of fluctuations in raw material prices, etc.