Backed by the Southern Grid, leading the digital intelligent growth of power grids
The company is actually controlled by the Southern Grid Power Grid. Two asset restructuring undertook many core assets and technical achievements of the Guangdong Academy of Electrical Technology. Currently, it has formed a business system of 2 types of services (energy storage systems, test, and debugging) and 3 types of equipment (smart devices including intelligent monitoring equipment, intelligent power distribution equipment, robots and drones), and has grown into a leader in integrated digital intelligent solutions for power grids. The company's revenue in the past 6 years was 66.91% CAGR and net profit CAGR 301.43%, and its operating scale and profitability increased rapidly.
With the rapid construction of new energy storage, the company's leading industry is expected to benefit the core. On February 27, 2024, the National Development and Reform Commission and the National Energy Administration issued the “Guiding Opinions on Strengthening Capacity Building for Power Grid Peak Shifting Energy Storage and Intelligent Scheduling”, which clearly calls for strengthening the construction of new energy storage. At the same time, the National Energy Administration stated that the target for installing new energy storage by the end of 2025 is 30 GW, and all provinces and cities plan to collect nearly 70 GW of new energy storage installed targets by the end of 2025. The company's energy storage business is expected to benefit the core and maintain rapid growth: (1) Project advantages: the company is leading the Guangdong New Energy Storage Research Institute to carry out a new energy storage demonstration project exceeding 100 megawatts; (2) Regional advantages: 100 new energy storage projects in Guangdong, with a total investment of 229 billion yuan; (3) Resource advantages: The company is backed by the South Grid, and the South Grid Energy Storage has plans to put into operation 16 GW of new energy storage in 2024-2025.
Flexibility transformation opens up market space, and the rapid growth of the testing and testing business can be expected. The “Guiding Opinions” clearly suggest that further flexibility transformation of coal power units be carried out, and that the existing coal power units will be “fully reformed” by 2027. According to our estimates, the market space will be increased by 10 billion yuan, with an annual market space of 25-30 billion yuan. The company has accumulated deep experience and technology for more than 60 years of clean and efficient use of electricity and energy and grid connection of the Guangdong Academy of Electrical Engineering. It acquired Guizhou Chuangxing and Guangxi Guineng in 2023 and Guangzhou Huineng in 2024 to accelerate expansion.
Leading the “low altitude” inspection of power grids, establishing a new growth engine for quality productivity. The 2024 government work report included the low-altitude economy as one of the new types of productivity. The State Grid and the Southern Grid are expected to increase investment in low-altitude inspections as central enterprises. The company's “Insight” fully automatic drone inspection system leads the industry, supporting full coverage of drone inspections at Guangxi power grid substations. It is the largest low-altitude inspection system in the domestic energy sector. As of January 2034, it has completed high-precision reality modeling of 2017 outdoor substations in Guangdong Province, and has obtained pilot permits for the Jiangsu and Hubei regions of the State Grid. It is expected to be fully rolled out in the future, becoming the company's new growth engine.
The new power system opens up long-term growth space. The new power system is one of the core elements of China's power grid construction. The company lays out a full range of “source network load storage”, source-side layout flexibility transformation and new energy grid-connected testing, grid-side unmanned intelligent inspection technology and flexible resources are safely connected to the grid. The load side uses the Silk Road iNOS operating system as the terminal to sense and adjust, and the energy storage side leads the National Research Institute of Energy Storage to carry out new energy storage demonstration and core business cards.
Investment advice: The company's net profit for 2024-2026 is estimated to be 460, 6.30, and 821 million yuan, corresponding PE is 36/27/20 times, and the target price for 2024 is 41.8 yuan, maintaining a “buy” rating.
Risk warning: Technology research and development falls short of expectations; project implementation falls short of expectations; policy implementation falls short of expectations; estimates have subjective related risks.