Core views
The company released its report for the first quarter of 2024, with a steady increase of 27.55% in performance. Net cash flow from operating activities increased by 148 million yuan, a significant increase. The increase was mainly due to strengthened repayment management and increased customer repayments. The high number of power grid tenders in 2023 led to steady growth in the company's secondary grid business, and it is expected that grid investment will continue to rise in 2024. The company's new energy business has benefited from a high increase in wind power and photovoltaic installations in the context of rapid construction of clean energy. The company is deeply involved in the smart grid business, vigorously developing new energy and energy storage businesses, and will continue to benefit from the strong demand brought about by the boom in the power equipment industry.
occurrences
The company released its report for the first quarter of 2024. 2024Q1 achieved operating income of 1,545 billion yuan, a year-on-year increase of 31.21%, net profit to mother of 181 million yuan, an increase of 27.55% over the previous year; net profit after deducting non-return to mother was 179 million yuan, an increase of 23.47% over the previous year.
Brief review
2024Q1 performance continues to rise, with steady performance in core sectors
1) Revenue for the first quarter of 2024 reached 1,545 billion yuan, a year-on-year increase of 31.21%. Net profit attributable to mother/net profit not attributable to mother was $1.81/179 million, respectively, up 27.55%/23.47% year-on-year. On the performance side, 2024Q1's performance continued to rise.
2) The company's core sector is expected to continue to rise. Sectors such as power transmission, transformation, and distribution have maintained steady growth, while businesses such as electricity generation, power electronics, and international sectors are growing relatively fast.
Gross margin is under relative pressure, and cash flow has increased significantly
1) The gross margin for the first quarter of 2024 reached 33.96%, a year-on-year decrease of 3.2 pct. It is expected to be mainly due to changes in product structure, an increase in the share of relatively low margin products; price fluctuations of secondary products on the main network, etc.
2) Significant increase in cash flow: 2024Q1's net cash flow from operating activities increased by 148 million yuan, mainly due to continued strengthening of repayment management and increased customer repayment.
Deeply cultivate the steady growth of power grids, continue to explore the new energy market, and actively promote international development
1) The company continues to be deeply involved in power grids, ranking second in the market share of secondary relay protection equipment. In the first batch of tenders for the transmission and transformation project of the State Grid headquarters in 2024, the relay protection and substation monitoring system business won a bid amount of more than 54 million yuan, accounting for about 13%, ranking second.
2) The high increase in the installed capacity of new energy sources has driven the company's business growth. By the end of 2023, the total installed capacity of solar energy was 217 GW, an increase of 148% over the previous year; the total installed capacity of wind power was 75.9 GW, an increase of 102% over the previous year. New energy installations maintain a high growth trend, and the company's off-grid power generation side business will continue to benefit.
3) Continued breakthroughs in the international market. The company actively promotes international development strategies, continues to take root in overseas markets such as Southeast Asia and Africa, won bids for the Tabela Hydropower Project in Pakistan, fully delivered the ADMS project in Nairobi, Kenya, etc., and further obtained application practices in the international market; it will also strengthen overseas localization strategies and enhance the localization market and service capabilities of international business.
Performance forecasts
The company's net profit for 2024 and 2025 is estimated to be 73/85 million yuan, PE 18.0/15.5x.