According to Mingyang Electric's annual report and quarterly report, in 2023, the company achieved operating income of 4.95 billion yuan, an increase of 53% year on year, and net profit to mother of 50 billion yuan, an increase of 88% year on year.

In the first quarter of 2024, we achieved operating income of 1.03 billion yuan, an increase of 46% year on year, and net profit to mother of 90 million yuan, an increase of 104% year on year.

Key points of investment

Profitability continues to improve

In 2023, the company achieved a gross profit margin of 22.69%, a year-on-year increase of 1.52 pct, and a net profit margin of 10.06%, an increase of 1.86 pcts year-on-year. 2024Q1 achieved a gross profit margin of 23.07%, a year-on-year increase of 3.03pct, a net profit margin of 8.68%, and a year-on-year increase of 2.4pct. The company achieved sales revenue of 4.948 billion yuan, including the photovoltaic industry line of 2,074 billion yuan, an increase of 83%; the wind power industry line of 1,376 billion yuan, an increase of 22%; and the energy storage industry line of 668 million yuan, an increase of 237% over the previous year. Compared with the same period last year, the PV industry line's share of sales revenue increased from 35% to 42%, and the energy storage industry line's share of sales revenue increased from 6% to 13%.

Strengthen the core competitiveness of offshore new energy sources and promote the pace of localization. Based on its technological innovation advantages in the field of offshore new energy, the company continues to promote research and development of marine application products. The offshore wind power booster system products developed have broken the monopoly of foreign brands. In August 2022, the 66kV booster system independently developed by the company was successfully delivered to the SDIC Shenquan 2 offshore wind power project. In October 2023, the company successfully won the bid for Guohua's HG14 offshore photovoltaic 1000MW project, which is currently the world's first GW-class high-capacity offshore photovoltaic project to enter the implementation stage. The 66kV prefabricated intelligent offshore boosting system completely independently developed and manufactured by the company will be the first GW class 66kV booster system used in offshore photovoltaic power generation projects, and will create a model project for a national pile-based fixed offshore photovoltaic project.

There is a shortage of transformers in the international market, indirect overseas going+global layout two-wheel drive

In 2023, the company actively participated in the international market, focusing on developing markets overseas, and rapidly expanding the company's popularity in the international market through cooperation with well-known domestic leading new energy companies. At the same time, the company promoted the global layout of its business in an orderly manner, focusing on improving key capacity building such as overseas marketing, quality control, product design plans, and services, and initially established a two-wheel drive strategic model with indirect overseas going+global layout.

During the reporting period, the company obtained a series of certifications from domestic and foreign authorities, such as China's CQC, US UL, EU CE, and European DNV-GL certification, laying a solid foundation for the company's global layout. In 2023, the company developed 66kV step-up transformers and gas-insulated switchgear, and achieved batch application. The product structure extended from medium to low voltage categories. High voltage main transformer products such as 110/220 kV, GIS with a voltage rating of 110 kV have been shipped in small quantities, and GIS with a voltage rating of 252 kV has also begun to be put on the market. In January 2024, the company completed the acquisition of Guangdong Borui Tiancheng Energy Technology Co., Ltd. to accelerate the promotion of the new energy booster station business.

Profit forecasting

It is predicted that the company's revenue for 2024-2026 will be 63, 8, and 9.8 billion yuan, and EPS will be 2.12, 2.83, and 3.50 yuan respectively. The current stock price is 19, 14, and 11 times PE, respectively, maintaining a “buy” investment rating.

Risk warning

Renewable energy installations fell short of expectations; risk of a sharp rise in raw material prices; risk of overseas operations and exchange profit and loss; and systemic risk of large markets.