Deeply involved in AC/DC switching equipment, with plenty of orders in hand
The company's core products are high voltage, ultra-high voltage, and UHV AC/DC switchgear. At present, it has successfully developed high-end equipment such as the world's first 550 kV high-speed circuit breaker, the first domestic ±800 kV DC high-speed switch, and 550 kV 80 kilovolt high-capacity switch, and realized engineering applications. The company's leading position in the grid market is stable, and the number of new contracts signed in 2023 increased by 44.2% year-on-year.
The high voltage business grew steadily. The market share of UHV and distribution networks led the continuous steady growth of the company's high voltage business in 2023, achieving operating revenue of 6.156 billion yuan, an increase of 23.67% over the previous year. The market share of the UHV special tender, the bid section of the State Grid Recruitment Office, and the 14 provinces with distribution network agreement inventory all maintained leading market share. The winning bid amount of 17 provinces on the distribution network side increased year-on-year, and contracts for high-end products in the value chain continued to rise.
Electricity reform is on the rise, and the distribution network side is expected to gain strength later
Since the introduction of Electricity Reform Document No. 9 in 2015, China's electricity price mechanism has been gradually straightened out, the electricity market system has basically been established, and the electricity reform has achieved initial results. However, as a new energy revolution characterized by large-scale development and utilization of new energy sources progresses further, the importance of recent electricity reform has also been raised once again. However, at present, distributed new energy consumption pressure is high, and network-side construction is expected to accelerate. The company's leading edge in distribution network products is obvious, and it is expected to fully benefit.
Profit forecasting
We are optimistic about the acceleration of power grid investment and construction, and the company has a clear competitive advantage on the high voltage, ultra-high voltage, and distribution networks side. The company's revenue for 2024-2026 is 132.28, 159.43, and 19.169 billion yuan, respectively, and EPS is 0.8, 1.04, and 1.27 yuan respectively. The current stock price corresponds to PE 22.2, 17.2, and 14.0 times, respectively. For the first time, coverage is given a “buy” investment rating.
Risk warning
Raw material prices have risen; UHV has fallen short of expectations; industry competition has intensified; general market systemic risks, etc.