Description of the event
The company released its 2023 annual report and 2024 quarterly report, achieving revenue of 57.3 billion yuan in 2023, an increase of 25% year on year; net profit attributable to shareholders of the parent company was 3.7 billion yuan, showing a year-on-year decline, but considering that changes in the fair value of China Control Technology shares held by the company had a significant impact on the company's net profit and the non-recurring profit and loss of component asset divestment in 2022, the company withheld net profit of 3.8 billion yuan, an increase of 15% year on year; 2024Q1 achieved revenue of 15.9 billion yuan, an increase of 1% year on year; after deduction Net profit attributable to shareholders of the parent company was 1 billion yuan, a year-on-year decrease of 5%.
Incident comments
Currently, the company mainly includes two major businesses: low-voltage electrical appliances and new energy. Among them, household photovoltaics (a subsidiary of Zhengtai Aneng) accounts for a relatively high share of the new energy business, so let's look at the two major businesses.
In terms of the low-voltage electrical appliance business, we judge that the company's share and profitability of low-voltage appliances continues to improve.
1) In 2023, the company's low-pressure revenue was 201 billion yuan, an increase of 8% over the previous year. On the one hand, the company continued to promote channel capacity building and industry market development, and domestic market share continued to increase, and its low voltage revenue all achieved steady growth in 2023; by the end of 2023, the company had 445 first-level dealers, 21,860 second-level distributors, and more than 100,000 terminal channels, achieving a district and county coverage rate of about 92%; on the industry side, the company launched industry-leading system solutions and series of products in the fields of 5G & communications, new energy, and process industries to meet the market's demand for high-end and intelligent low-voltage appliances; on the other hand, the company's low-voltage appliances The international business continues to advance, with more than 2,000 active channels and project customers worldwide, achieving business coverage in more than 140 countries. In 2023, the company's international business revenue was 4.5 billion yuan, an increase of 16% over the previous year. Among them, revenue in North America increased by more than 50%, contributing to revenue growth. 2024Q1 expects the company's low voltage electrical revenue to continue to perform well.
2) In terms of gross margin, the company's gross profit margin of the low-voltage electrical appliance business in 2023 was 28%, up 1.85pct year-on-year, and compared with the first half of 2023, the gross margin of the low-voltage electrical appliance business is expected to increase further, mainly due to the company's strengthened cost control and logistics and warehousing expense management; it is expected that 2024Q1 will continue the recovery trend.
In terms of the photovoltaic business, the scale of household installations continues to grow rapidly. In terms of household use, the company's subsidiary Zhengtai Energy will be connected to the grid in 2023, with a year-on-year increase of about 50%, with a market share of about 29%. At the same time, the company sold 8 GW of power plants and continued to promote an asset-light model of operation. By the end of 2023, the household power plant holding scale was about 14GW. In 2023, Zhengtai Energy achieved a net profit of 2.6 billion yuan, an increase of about 50% over the previous year, maintaining a high growth rate. 2024Q1 anticipates that the company's household photovoltaic installations will continue to increase on a large scale.
In summary, the company's low-voltage electrical business is ushering in profit restoration flexibility, and household photovoltaics are maintaining a high growth rate. It is estimated that in 2024, the company's net profit attributable to shareholders of the parent company will reach 4.8 billion yuan, which is about 9 times the PE valuation. Maintain a “buy” rating.
Risk warning
1. The risk of macroeconomic fluctuations;
2. The risk that power grids in the household photovoltaic industry will fall short of expectations.