Incident: The company and Westinghouse officially reached a global new energy strategic cooperation. On May 31, 2024, the company and Westinghouse Electric announced the establishment of a global new energy strategic partnership and signed a licensing agreement, targeting overseas markets, focusing on countries and regions such as Europe, South Africa, the Middle East, East Asia, Southeast Asia, etc., focusing on the middle and high-end markets, and providing energy storage system solutions such as grid-side energy storage, industrial and commercial energy storage, and household energy storage.

As a comprehensive solution service provider for energy storage and distribution systems, the company has been deeply involved in the distribution system and energy storage industry for many years. In the field of power distribution equipment, we are focusing on building a “one core, double support+dual drive” business system. The bus business is the core basic unit, and the complete equipment and transformer business is dual supported. The smart components and power engineering turnkey business is dual drive. The company's power distribution business revenue was +42% year-on-year in 2023, of which high and low voltage bus revenue increased 48.5% year on year; the operating income of complete equipment was 99 million yuan, an increase of 48.58% year on year, achieving a gross profit margin of 17.96%, an increase of 2.7 pct over the previous year.

The company has a rich product layout, which has laid a solid foundation for the global market layout. In the field of energy storage systems, with “full product line layout, full industry chain construction” as the development goal, grid source side energy storage, industrial and commercial energy storage as the main focus, continuously improving the self-sufficiency rate of energy storage system components, increasing the layout of user-side energy storage power plant project development, operation and maintenance, and focusing on building the core competitive advantage of the energy storage business. In terms of transformers, the company continues to increase product research and development, and continues to develop new products. In 2023, products such as high-capacity new pluggable plug-in boxes, high-heat dissipation resin casting busbars, WEP-II high-current quick low-voltage switch cabinets, 40.5kV energy storage transformers, and YB-40.5 inverter boosting integrated cabins were put on the market, and significant benefits were achieved.

The global new energy strategic partnership with Westinghouse is expected to accelerate the company's entry into the global market. Westinghouse Electric was founded in 1886 in Pennsylvania, USA. Its main business areas include more than 4,000 products in the categories of power generation equipment, power transmission and transformation equipment, electrical equipment, electric control equipment, and electronic products. Westinghouse has always focused on the fields of home appliances, nuclear power, motors, environmental protection, energy, etc., and has rich professional R&D and manufacturing experience, and has established an excellent brand image in many overseas markets. Weiteng's manufacturing, technology, and Westinghouse's brand and market are expected to complement each other's advantages and share resources, further providing new impetus for the two sides to advance their global strategies.

Investment recommendations: 24-26 revenue was 45.4/62.7/7.96 billion yuan, net profit to mother was 2.1/3.3/4.1 billion yuan, EPS was 1.35/2.10/2.65 yuan, and the corresponding PE was 17/11/9X. The company's overseas business is expected to grow rapidly and maintain a “recommended” rating.

Risk warning: Market competition intensifies; overseas market demand falls short of expectations; energy storage market falls short of expectations.