Matters:
The company released its 2023 annual report and 2024 quarterly report. In 2023, it achieved operating income of 2,537 billion yuan, an increase of 41.77% over the previous year; net profit to mother was 281 million yuan, an increase of 36.71% over the previous year. The first quarter of 2024 achieved operating income of 505 million yuan, an increase of 9.85% year on year; net profit to mother was 42 million yuan, an increase of 38.21% year on year.
Commentary:
The energy storage and testing business increased rapidly, and mergers and acquisitions of subsidiaries contributed to increased performance. Looking at revenue products in 2023, 1) The energy storage system technology service business achieved revenue of 726 million yuan, an increase of 123.11% over the previous year, and achieved rapid revenue growth; 2) The test inspection and commissioning service business achieved revenue of 582 million yuan, an increase of 64.73% over the previous year. The scale of the headquarters grid-side test and inspection business continued to expand, and new acquisitions of subsidiaries brought business growth; 3) The intelligent power distribution equipment business achieved revenue of 442 million yuan, an increase of 31.85% over the previous year. The company independently developed Revenue from iNOS systems and core modules increased dramatically; 4) The intelligent monitoring equipment business achieved revenue of 258 million yuan, an increase of 5.04% over the previous year, and business revenue from video surveillance devices and fault location devices increased; 5) The robot and drone business achieved revenue of 275 million yuan, a year-on-year decrease of 7.36%. The annual procurement cycle for core customers changed, and the overall procurement scale declined slightly. Overall, various businesses have continued to grow steadily, and cross-regional development results have been remarkable. Newly acquired subsidiaries (Guizhou Chuangxing and Guangxi Guineng) contributed to increased performance, and the company's business scale was further expanded.
There was a slight decrease in gross margin and an increase in expenses due to subsidiaries. Gross margin in 2023 was 28.98%, down 0.68pct year on year; net profit margin was 11.19%, down 0.31pct year on year; in terms of cost ratio, sales, management, and R&D expenses were 3.65%, 7.37%, and 6.41%, respectively, -0.88, +0.36, and -0.37pct year over year, respectively. The two new subsidiaries were acquired together, and management expenses increased accordingly. The gross margin for Q1 in 2024 was 32.15%, up 7.58pct year on year; the net margin was 8.43%, up 1.83 pcts year over year.
The company has a multi-business layout, deepening vertical expansion and horizontal expansion. The energy storage business uses grid-based energy storage products as the core to enrich the original technical layout and continue to strengthen the competitive advantage of the business; the testing business will give full play to the company's advantages, actively explore the State Grid market, strengthen marketing collaboration, and accelerate the development and application of digital intelligent inspection equipment; the intelligent power distribution and monitoring business will rely on integrated source network load storage technology and artificial intelligence application technology to actively explore new tracks and build new business formats; the intelligent electricity use business will continue to deepen ecological construction and provide customers with a new standardized series of “product packages” for electricity distribution; the robot and drone business will strengthen the “smart eye” unmanned inspection product ecology The system strengthens the core technology of “smart knowledge” monitoring, thereby effectively expanding the company's market share.
Investment advice: The growth rate of the energy storage system technology service business fell short of expectations, and profit forecasts were lowered. We expect revenue for 2024-2026 to be 38.79/55.12/7.438 billion yuan, corresponding growth rates of 52.9%/42.1%/34.9% (original 2024-25 forecast value of 65.43/9.439 billion yuan); net profit to mother of 4.14/5.70/ 763 million yuan, corresponding growth rates of 47.4%, 37.6%, and 33.8%, respectively (original 2024-25 forecast value 595/889 million yuan). Maintain a “strong” rating.
Risk warning: Downstream customers are concentrated, energy storage project construction progress falls short of expectations, and downstream customers are concentrated.