Focusing on new power systems, the company has a forward-looking layout of business segments such as transmission and transformation, DC, power distribution, electricity meters, new energy support, charging and switching, etc., and they all have good competitiveness. The company is expected to enjoy the dividends of power grid investment and construction, and the company's characteristic business segments such as HVDC, flexible DC, and distribution networks may bring business flexibility in the future.
The three-dimensional layout of the business revolves around the new power system. The company has a rich history and a wide range of products. In historical development, the company focuses on superior grid-side products and extends to source, load, and storage to cultivate “double new” overall solution capabilities. Currently, the main categories of companies cover business sectors such as power transmission and transformation, DC, power distribution, electricity meters, new energy support, charging and switching, etc., and all have good competitiveness.
Performance analysis. The company's 2023 revenue, net profit attributable to mother, and net profit deducted from non-net profit of 170.6, 10.05, and 869 million yuan, increased by 13.51%, 28.03%, and 21.9%, respectively. Among them, revenue from the intelligent power conversion and distribution business and intelligent medium voltage power supply business remained flat, and the new energy and system integration business increased by 42%. In connection with this business calibration, the smart meter business increased by 13% and the DC transmission business increased by 3%. The company's net interest rate in '23 was +0.45pcts year-on-year, maintaining good cash repayment and excellent cash flow. At the end of '23, the company had net cash of nearly 5 billion yuan, and the report quality was high. In Q1, the company's revenue in Q1, after deducting non-net profit of 28.1, 2.37, and 226 million yuan, decreased by 15%, increased by 47.4%, and 57.1% year-on-year. Profit growth was significantly faster than revenue, mainly due to changes in the company's revenue structure and internal cost reduction and efficiency.
Investment in power grids has been rising steadily, and the company's operations are improving. On the industry side, domestic electricity consumption has increased beyond expectations in recent years, while transmission and distribution prices have increased slightly. The expansion of the electricity bill pool guarantees the ability to invest in power grids, while the increase in electricity consumption and peak load, long-term pressure on new energy consumption, and the emergence of new demand such as electric vehicles have all brought about long-term and objective demand for power facilities. It is expected that electricity investment will maintain a certain increase in the future. The company has good competitiveness in the fields of high voltage transmission and transformation, electricity distribution, DC, etc., and will benefit from the positive development of the industry. Judging from winning the bid last year, the company won bids for power transmission and transformation equipment for the State Grid Corporation's transmission and transformation project in 2023, and its market share remained in the top ten.
The company's DC and power distribution business may be flexible. DC and flexible are the dominant businesses that the company was cultivating in the early days. In '23, the State Grid centralized bidding, the company had a market share of 19% for UHV converter valves and 18% for flexible direct converter valves, which had the highest market share. If flexible DC and UHVDC construction accelerates in the future, this business may be resilient.
In addition, the company's subsidiaries such as Xu Ji in Zhuhai have accumulated over a long period of time in the field of power distribution and also have certain characteristics, and may benefit from distribution network automation upgrades in the future.
Investment advice: The company's business layout is broad, the main business is competitive, the industry is still growing, future development is sustainable, and its characteristic business may bring some flexibility. The company completed restricted stock incentives and established excess performance incentives for individual subsidiaries last year. Covered for the first time, a “gain” rating was given.
Risk warning: Power construction falls short of expectations, the company's bid falls short of expectations, and overseas business progress risks.