performance

The company announced 2024H1 results, achieving revenue of 10.284 billion yuan, YoY +8.24%; realized net profit attributable to mother of 0.452 billion yuan, YoY +5.23%; realized net profit deducted from mother of 0.471 billion yuan, YoY +22.87%. Among them, 2024Q2 achieved revenue of 5.602 billion yuan, YoY +19.03%; realized net profit of 0.249 billion yuan, YoY +3.63%; realized net profit of 0.281 billion yuan without return to mother, and YoY +34.34%.

Grid investment is booming, and the transformer and switch business continued to improve in the first half of 2024. The company's main transformers achieved revenue of 4.468 billion yuan, an increase of 21.64% year on year; switching products achieved revenue of 4.081 billion yuan, an increase of 25.07% year on year, mainly benefiting from the continued development of the transmission and distribution equipment manufacturing industry, and the company received a large number of export orders. The company has always maintained its leading edge in technology. In the first half of 2024, the company successfully developed a large number of major power equipment in the energy field, such as China's first ±400kV converter transformer using a domestically produced on-load voltage regulator and China's first 126kV environmentally friendly high-capacity vacuum column circuit breaker.

Domestic and overseas market demand resonates to help steady growth in performance

On the domestic side, the company's new business orders continue to emerge, helping a large number of national key projects such as the construction of 14 UHV projects including Jinshang-Hubei and Ningxia-Hunan, grid-connected power generation at the Malibu Hydropower Station, and the transmission of green electricity in the 10 million kilowatt “Shagowang” region of Wuhai, Aorui, etc., to steadily drive the company's growth. Overseas, the company won the bid for Turkey's Akuyu nuclear power plant project to achieve new breakthroughs in the nuclear power field. Stand-alone products expanded to Italy, Sweden, Ireland and other countries, and the engineering business expanded to countries such as Jordan, Ghana, Zimbabwe, etc., and the overseas market became a new growth point for the company.

Investment advice

Considering the continued high level of investment in power grids, the company is expected to fully benefit from the growth of the industry. We expect net profit to be 1.223/2.023/2.513 billion yuan on 24/25/26, respectively, corresponding to PE 29/18/14 times, respectively, maintaining a “buy” rating.

Risk warning

Grid investment falls short of expectations; UHV construction falls short of expectations; industry competition increases risks.