Key points of investment
With two-wheel drive in the new energy electronic control+transmission sector, net profit after deducting non-return continued to increase in 2023. The company achieved total operating income of 3.75 billion yuan, an increase of 33.6% year on year; net profit of 50 billion yuan, up 88.2% year on year; net profit after deducting non-return to mother was 420 million yuan, up 105.7% year on year. With 2024Q1, the company achieved total revenue of 550 million yuan, a year-on-year decrease of 10.0%; net profit to mother of 55 million yuan, a year-on-year decrease of 29.5%; net profit after deducting non-return to mother of 71 million yuan, an increase of 29.3% over the previous year.
Wind and solar hydrogen storage are being developed collaboratively, and profitability has been greatly improved
In 2023, the company's new energy electronic control business achieved revenue of 3.04 billion yuan, an increase of 36.14% over the previous year; the gross profit margin was 33.24%, an increase of 7.51 pcts over the previous year. 2024Q1, the company's new energy electronic control business achieved revenue of 419 million yuan, a year-on-year decrease of 12.19%; gross profit margin was 41.19%, an increase of 13.25 pcts year-on-year. The double feed and full power wind power converters independently developed by the company not only have a complete series and are widely used, but their excellent performance is very competitive in the market. It provides wind power converter products in many large offshore and onshore wind farms to help wind turbines efficiently connect to the grid. In the field of photovoltaic power generation, the company provides competitive overall solutions, including a series of small to medium power photovoltaic power generation systems and centralized high-power photovoltaic power generation systems, and has launched three smart solutions for household, commercial, and power plants. In terms of energy storage, the company launched products such as the 3.45 MW centralized energy storage converter and the industry's first stand-alone 2.5 MW centralized energy storage converter, and has created several 100 megawatt projects with the continued good development momentum of energy storage products. In terms of hydrogen energy, the company provides 500kW~20MW high-power IGBT hydrogen power supply products. It is the first domestic manufacturer of high-power MW IGBT hydrogen power supplies with long-term stable operation. The products have been successfully used in Gansu, Shaanxi, Yunnan and other places.
The transmission sector has increased its layout and maintained a high level of profitability
In 2023, the company's engineering transmission business achieved revenue of 481 million yuan, up 29.76% year on year; gross profit margin was 45.57%, up 0.98 pct year on year. The company continues to expand the strategic layout of the transmission business to meet the needs of different industrial sectors. 2024Q1, the company's engineering transmission business achieved revenue of 62 million yuan, a year-on-year decrease of 28.99%; gross profit margin was 40.18%, a year-on-year decrease of 1.81 pct. In 2023, the company successfully entered the field of main transmission and auxiliary transmission in papermaking; became a leading domestic brand in the field of large-scale natural gas transportation in the national pipeline network; became a leading domestic brand in market segments such as deep-well full frequency conversion drilling rigs, large-scale oil and gas fracturing, large-scale steel rolling, and shield machines; 1700 cold rolling and 1450 continuous hot rolling main drives were shipped overseas; and continued to lead in large-scale test benches such as gearbox testing, and achieved overseas sales. The company's IGCT has a more stable market position with the main drive HD8000 and the low-voltage engineered HD2000 as the core devices; the HV350 general-purpose series products were released and thousands of units were sold; and customized models using engineering products as platforms were used in batches in the fields of shields and dump trucks.
Profit forecasting and valuation
The profit forecast was lowered and the “buy” rating was maintained. The company is a platform-based enterprise in the field of electric energy conversion and control. The new energy and transmission business is two-wheel drive. Considering that the revenue growth rate of the company's new energy electronic control and transmission business is slower than expected, we lowered the company's profit forecast for 2024-2025 and added a profit forecast for 2026. The net profit to mother is 6.38, 7.87, and 941 million yuan respectively, with year-on-year growth rates of 27.1%, 23.2%, and 19.6%; EPS is 1.44, 1.77, 2.12 yuan/share, respectively, corresponding to PE 14, 11, and 10 times PE, respectively.
Risk warning
The installed capacity of new energy fell short of expectations; market competition increased risk.