The leading flat electromagnetic wire company, the dividend amount reached a record high in 2023: The company is the global leader in flat electromagnetic wire. In 2023, the company sold more than 70,000 tons of electromagnetic wires, +23%. Among them, the market share of UHV transposition wires ranked first in the domestic and foreign industry for three consecutive years, and the annual sales volume of new energy vehicle products was +180%. The company implemented a high dividend strategy. In 2023, the company paid 4 yuan for every 10 shares, with a total dividend amount of 300 million yuan, an increase of 16.73% over the previous year; the dividend rate reached 50.68%, the dividend rate reached 4.95%, and the dividend amount reached a record high in the company's history.
Cable leaders in the central and western regions intend to reduce costs and increase efficiency: The company has four leading regional wire and cable brands, and is a leading enterprise in the Midwest region, ranking first in the Hunan industry for 18 consecutive years; sales output value exceeded 10 billion dollars, up 17% year on year, and quantity and profit reached a new high; the wire and cable industry's business radiation radius is short, and the industry pattern is scattered (CR5 = 8.5%). In the context of the clean-up of non-high-quality production capacity in the industry, the company's work focuses on improving the operating rate, cost reduction and efficiency.
Demand for flat wire grew at a CAGR rate of more than 30% in 3 years, breaking production capacity barriers: 1) Magnetic wire is an important component of vehicle motors and power equipment, and the power of flat wire motors is 20%-30% higher than traditional round wires; 2) Benefiting from the acceleration of power grid investment and construction and the dual motor and 800V trend of new energy vehicles, we expect the market demand for flat electromagnetic wires to be 880,000 tons in 2023-2026, and the CAGR will exceed 30% in 2023-2026; 3) The company's 2020-2023 electromagnetic wire sales volume will exceed 46%, and the UHV market share will exceed 50%; The NEV application sector plans to add 30,000 tons/year to break the capacity bottleneck; 4) Overseas grid investment is booming, and the European Commission plans to accumulate 584 billion euros of grid investment between 2020 and 2030. The company's overseas gross margin in 2023 is over 16%, which is about 5pct higher than the domestic market. It plans to expand overseas growth through mergers and acquisitions.
Investment proposal: We expect the company to achieve operating income of 175.11/198.76/22.618 billion yuan and net profit of 5.90/6.94/790 billion yuan in 2024-2026. The corresponding PE was 12.07/10.26/9.01 times, respectively, and a “gain” rating was given.
Risk warning: Investment in power grid infrastructure falls short of expectations, the penetration rate of new energy vehicles falls short of expectations, increased competition in the downstream market, large fluctuations in raw material prices, high risk of accounts receivable balances, risk of majority shareholders' equity pledges, capacity construction progress falling short of expectations, etc.