Incidents:
Recently, the company released its 2024 quarterly report, achieving operating income of 1,545 billion yuan, an increase of 31.21%; net profit to mother of 181 million yuan, an increase of 27.55%; net profit after deducting non-return to mother of 179 million yuan, an increase of 23.47% over the previous year.
Comment:
Earnings increased significantly in the first quarter, and profits remained at a high level. In terms of profit, the company's gross margin for Q1 in '24 was 33.96%, YOY-3.2pct, net margin was 11.78%, and YOY-0.32pct.
Looking at the industry, grid investment remained strong. The investment completed in January-March '24 was 76.6 billion yuan, an increase of 14.7% over the previous year; in January-January '24, wind power added 15.5GW of installed capacity, YOY +49%, and PV added 45.74GW of installed capacity, YOY +36%. The rapid growth in power grid investment and new energy installations is expected to drive the company's steady and far-reaching performance.
The company focuses on technological innovation, and the energy storage layout is progressing smoothly. The company focuses on R&D. The R&D cost rate in 2023 remains high at 9.41%. The direction includes new applications of new products such as hydrogen energy/flexibility/energy storage, as well as innovation in the fields of industrial Internet platforms, artificial intelligence, and information security. In 2024, Q1 successfully passed the certification of four technical achievements in the fields of rail transit, power switches, and intelligent operation and maintenance of substations, and was at the leading international level. In terms of energy storage, the company's first mass-produced energy storage battery PACK was successfully put into operation. It has the ability to mass-produce battery PACs, and the energy storage business is expected to become the main driving force for the company's growth in the future.
Profit forecast and investment rating: We expect the company's 2024-2026 revenue to be 66.7, 80.85, and 9.540 billion yuan, respectively, up 16%, 21.2%, and 18%; net profit to mother will be 748, 8.97, and 1,013 million yuan, respectively, up 19.2%, 19.9% and 13.0% year on year, maintaining the “buy” rating.
Risk factors: Grid investment falls short of expectations, fluctuating raw material prices, grid construction progress falls short of expectations, and increased market competition.