Deeply involved in the transmission and distribution industry, leading private enterprise with primary equipment

The company is deeply involved in power transmission and distribution equipment, and is currently one of the few manufacturers in the transmission and distribution equipment industry that has R&D, manufacturing and solution capabilities for primary equipment (traditional mechanical power equipment), secondary equipment (controlled power equipment), and power electronics equipment for power systems. The company's main products include GIS and GIL of 750 kV and below, relay protection equipment and monitoring systems for substations of 500 kV and below, SF6 circuit breakers and isolators of 750 kV and below, etc., and is currently in a leading position in the industry.

2024Q1 achieved operating income of 2.658 billion yuan, an increase of 22.36%, and achieved net profit of 0.363 billion yuan to mother, an increase of 66.32%, and steady growth in performance. In 2023, orders were added at 16.513 billion yuan (excluding tax), an increase of 36.22% compared with the same period last year, exceeding the annual operating target. The company's business goal in 2024 is to achieve new contract orders of 20.6 billion yuan (excluding tax), an increase of 25% year on year; to achieve operating income of 15 billion yuan, an increase of 20% year on year.

Consolidate its position in the domestic power grid market and continue to explore overseas markets. The company actively integrates into R&D and innovation activities in the high-end market; vigorously enhances the brand influence of the power generation industry (especially the new energy market segment), and actively expands key customers. The market share in domestic power grids is expected to increase.

Overseas market: The company has long adhered to overseas strategies and continued to invest in products and markets. In 2023, the company added 4.01 billion yuan in overseas market orders, an increase of 34% over the previous year. Many products have passed the qualification certification of Spain, the United Kingdom, France, Singapore, Egypt, Malaysia, the United Arab Emirates, Mexico, Colombia, South Africa, etc. Currently, overseas power equipment is in high demand, and the company is expected to fully benefit.

Profit forecasting

We are optimistic that the company will continue to expand overseas markets while consolidating its position in the domestic power grid market. It is estimated that the company's revenue for 2024-2026 will be 15.23, 18.42, and 22.19 billion yuan, respectively, and EPS will be 2.7, 3.31, and 4.03 yuan respectively. The current stock price corresponding to PE is 24.8, 20.2, and 16.6 times, respectively. This is the first coverage, giving a “buy” investment rating.

Risk warning

Prices of raw materials have risen; progress in overseas markets has fallen short of expectations; industry competition has intensified; systemic risks in the general market, etc.