The company announced 2024 Q1 revenue, net profit and deducted non-net profit of 1,545, 181, and 179 million yuan, with year-on-year increases of 31.2%, 27.5%, and 23.5%, respectively. The company's main products are competitive. Small categories of high-barrier products such as system stability and camera adjustment, the power electronics business, and the integrated power distribution switch business have new growth points. Maintain a highly recommended rating.
Q1 Good performance. The company's Q1 revenue was 1,545 billion yuan, up 31.2% year on year, gross profit margin was 34%, down 3.2 pcts year on year, related to differences in product structure within and outside the grid and price competition for power grid protection automation products last year.
The expansion of business scale led to a slight decline in the cost rate to 20.6%, of which the R&D cost ratio was 9.8%. It is still increasing reserves in new directions, and the net interest rate is relatively stable at 11.72%. The company's operating efficiency is improving, and its turnover level continues to improve. Net cash on hand at the end of the period exceeds 3 billion yuan, and the quality of the statements is high.
Grid and off-grid business resonance is improving. The company has comprehensive business coverage and maintains a high market share in the field of power grid automation, ranking second in the first batch of tenders in '24. The domestic protection automation bidding price dropped a lot in 2023, which had an adverse impact on the company's current profits, but prices have recovered significantly, and it is expected that the pattern will continue to be relatively orderly. In addition, the company has increased the provincial grid market layout, and also strengthened protection automation coverage in the field of distribution grids. In the industry, the huge challenges of new energy consumption and the development of electric vehicles and household photovoltaics objectively require increased investment in power grids, while grid electricity sales and transmission and distribution prices are increasing, and investment capacity is supported. In the relevant direction, the main network is still being built and there are investment requirements. The rapid development of distributed photovoltaics poses great challenges to the automation of existing distribution network protection. Theoretically, distribution network side protection may require extensive transformation. In summary, we expect the company's power grid automation business to progress steadily.
New growth is being nurtured. Focusing on the accumulation and accumulation of historical businesses, the company has cultivated and expanded several types of businesses, which may become important profit growth points in the future: a) Stable control and camera adjustment businesses related to system stability. The barriers are high, the scale is small, and there are only a few participants. The company has always been the core supplier. The extensive application of new energy and power electronics devices may lead to a significant increase in these business demands.
b) Including power electronics services such as energy storage PCS, power quality, and frequency modulation. c) The company began setting up subsidiaries earlier to combine the company's secondary advantages to develop integrated distribution network equipment. Currently, it has a certain scale.
d) Off-grid and overseas business. The company is competitive in the field of power plant automation control. New energy supporting businesses, industrial and commercial enterprises, and overseas businesses are all laid out and invested, and they all already have a certain business volume.
Investment advice: The company's traditional power automation business has always remained in the first tier. As power system asset expenses accelerate, traditional business growth is expected to accelerate, while cultivating the business may bring new growth points. Maintain a highly recommended rating.
Risk warning: Policy adjustments are risky, new business expansion falls short of expectations, and power grid investment falls short of expectations.