The industry has been deeply involved for many years and has diverse competitiveness: Weisheng Information focuses on smart grids, smart energy, smart street lights, smart security, etc., and provides comprehensive IoT application solutions. The industrial chain is widely distributed and complete. It has core products in the application layer, network layer, and sensing layer, forming products including electric monitoring terminals, water and gas sensing terminals, communication gateways, communication modules, and intelligent application management systems for electricity, water, gas, and heat. In terms of technological innovation, the company is in the position of a technology leader and standard setter in the industry. At the same time, the company has strong brand advantages and customer advantages. With independent research and development capabilities and reliable supply chain quality, the company has established long-term cooperative relationships with central enterprises such as China Grid and China Southern Grid, and won the top bid rankings in the State Grid and Southern Grid.
Focusing on the construction of new power systems, the share of investment in the electricity side market increased: China's smart grid market was 97.94 billion yuan in 2022, and the CAGR was 15.52% in the past five years, and the scale expanded rapidly. The amount of investment in the power grid market is rising year by year, and the cumulative investment amount of power grid projects in 2023 increased by 5.25% year on year.
During the “14th Five-Year Plan” period, the State Grid plans to invest 350 billion US dollars to promote the transformation and upgrading of the power grid. China Southern Power Grid plans to invest 670 billion yuan to promote the construction of a new power system centered on new energy sources, which will drive the growth of upstream and downstream demand in the industry. Looking at all aspects, the electricity consumption side accounts for the highest share of investment, promoting the construction of an electricity consumption information collection system, bringing opportunities for the company's business growth.
The overseas business layout has high potential for growth, creating a second growth curve: Weisheng Information's competitiveness in overseas markets continues to strengthen, the power AMI business has entered a stage of rapid growth, and continues to receive projects in the African, Egyptian and Bangladeshi markets. In 2023, the company added an AMI transformation project for the Lao Electric Power Company and signed a new 50 million contract with Bangladesh, further highlighting the company's recognition in overseas markets.
At the same time, as of 2023, Weisheng Holdings has operated more than 100 million grid-connected meter products, and has established 5 global R&D and manufacturing centers, located in Mexico, Brazil, Tanzania, and Changsha and Xiangtan, China, respectively. In terms of investment amount, the total investment of Weisheng Holdings will exceed 10.5 million euros, fully demonstrating the global layout strategy of Weisheng Holdings, which is expected to benefit Weisheng Information at the same time.
Investment advice: The company is committed to the development of digital power grids and digital smart cities. On this basis, the company has adapted to global industrial trends, continued to develop overseas business, and has developed diversified competitiveness at home and abroad.
We are optimistic about the company's development and forecast that the company will achieve revenue of 3,024 billion yuan, 3,950 billion yuan, and 5,079 billion yuan in 2024-2026; net profit to mother of 666 million yuan, 833 million yuan, and 1,042 million yuan; EPS 1.33, 1.67, 2.08, PE 28.7X, 22.9X, 18.3X, and maintain an “increase in holdings” rating.
Risk warning: risk of industry competition; risk of changes in the macro environment; risk of new technology research and development progress falling short of expectations; risk of falling short of expectations in policy implementation; risk of high customer concentration; risk of bad accounts receivable.