Deeply cultivate high-altitude safety work equipment and expand the direction of non-wind power

Established in 2005 and completed its listing in 2021, it is a leading domestic provider of high-altitude safety work equipment and service solutions. Its main products include high-altitude safety lifting equipment and high-altitude safety protection equipment. The company's products are mainly used in the wind power industry. In 2023, the wind power industry accounted for 98.02% of its revenue. It mainly includes special high-altitude safety work equipment such as tower lifts, crawlers, and high-altitude safety protection equipment such as ladders, life savers, slides, and fall prevention systems. At the same time, it has also launched new products such as heavy-duty lifts and rack and pinion elevators one after another. In addition, the company is continuing to promote the development of products in the non-wind power sector, such as industrial and construction lifting equipment, safety protection products, and emergency rescue products.

Core highlight 1: Broad industry space, incremental stock two-wheel drive, continuous increase in product value

The market space for aerial work equipment is mainly divided into incremental space and stock space. Larger fans will further increase the penetration rate of more efficient equipment such as elevators and heavy-duty elevators. At the same time, an increase in tower height will also increase the price of corresponding products. In addition to adding new markets, the company's revenue stock market in the wind power sector also reached 40%. We estimate that the current number of fans in stock is about 500,000, and the corresponding number of fans that can be converted is about 250,000. Assuming that the stock renovation is completed over a rolling 5-year period, the space corresponding to the annual stock market is about 3 billion yuan. Taken together, the total market capacity of wind power aerial work equipment, including lifting equipment, will be about 10.63 billion yuan in 2024.

Core highlight 2: Stable leading position and deep market barriers

The company's main products have a market share of about 70% in the domestic wind power industry. Lift products have a market share of about 30% in the European wind power industry, and the market share of free crawlers is close to 100% in North America and Asia Pacific, making them the world's leading lift equipment. Most of the products produced by the company need to be certified by relevant agencies and obtained relevant qualification certificates to meet customer entry requirements. In addition, fan manufacturers have high requirements for suppliers and take a long time to review qualifications, and are generally not easily replaced after becoming qualified suppliers; wind power generation companies usually have high requirements for product quality because they are involved in their own production safety. The company's leading position is quite stable.

Core highlight 3: Cost reduction and fee control drive increased profitability, and expenses are expected to drop rapidly during the period

The company has continued to expand new businesses in recent years, and investment in marketing, R&D, management, etc. has continued to increase, while increasing personnel remuneration. The cost rate during this period increased from 20.0% in 2020 to 27.9% in 2023. At present, the company has begun to reduce costs through continuous technical improvements and cost reduction and fee control. The 2024Q1 company's expense ratio fell to 22.5% during the period, and the company is expected to return to the previous level of net profit margin in the future.

Profit forecasting

We are optimistic about the company's leading position in aerial work equipment in the wind power industry. In the future, the company will have a broad market for wind power growth and inventory. The company's increased product penetration rate and new product iteration will continue to increase in stand-alone value. It is predicted that the company's revenue for 2024-2026 will be 15.25, 19.72, and 2,491 billion yuan, respectively, and EPS will be 1.95, 2.58, and 3.33 yuan respectively. The current stock price corresponds to PE at 23.8, 18.0, and 13.9 times, respectively, maintaining a “buy” investment rating.

Risk warning

New wind power installations fell short of expectations, the expansion of the international market fell short of expectations, the expansion of the non-wind power sector fell short of expectations, systemic risks in the general market, etc.