Key points of investment

Why are we optimistic about Igor?

The transformation of old power grids in Europe and the US, energy transformation in emerging markets such as the Middle East, and the promotion of electricity demand by AI development have all led to a sharp increase in global demand for transformers; leading overseas companies have been slow to expand production, bringing a valuable window for domestic companies to enter the high-value transformer market. Through deep binding to leading companies in the industry such as Sunshine Power, shipments of new energy step-up transformers have grown rapidly in recent years. At the same time, with the accumulation of rich overseas projects, Igor has vigorously expanded direct sales customers in Europe and the US, and further enriched product categories, which is expected to fully benefit from the development of the industry.

Bind leading customers to efficiently expand overseas markets

The company's high-frequency inductors and step-up transformer products are all supporting products for photovoltaic inverters or energy storage PCS; in recent years, the PV inverter industry's leading concentration has continued to increase, and industry CR3 increased from 33% to 57% in 2012-2023.

The company has cooperated deeply with leading customers in industries such as Sunshine Power, Huawei, Jinlang Technology, TBEA, etc., and has accumulated rich experience in overseas projects, cooperated with customers to build a complete after-sales guarantee system, accumulated good brand awareness and market reputation in overseas markets, and effectively controlled the increase in sales expenses.

Continue to deepen the layout of the global manufacturing and marketing system

In recent years, the company has accelerated the construction of overseas production capacity to avoid the risk of changes in trade policies. In July 2024, two production sites, Malaysia Phase II and Thailand New Energy, were completed and put into operation; the Mexican new energy product production base is expected to be completed in the second half of 2025; the Dallas distribution transformer production capacity in the US is expected to be put into operation in 2024Q4. The company has initially built a sales network covering major countries and regions around the world, such as China, the United States, Japan, Europe and Southeast Asia, to vigorously expand overseas direct sales business opportunities.

Accelerating overseas is expected to boost volume profits. Energy products with a “buy” rating (including transformers and high-frequency inductors) have grown into the company's leading business, accounting for 72.4% of revenue in 2023. The transformer business is also the main force supporting the company's growth. The company binds leading customers to efficiently lay out overseas markets, increase overseas direct sales and overseas production capacity construction, and is expected to increase transformer revenue scale and profitability. In summary, we expect the company's 2024-2026 revenue to be 4.81/6.04/7.256 billion yuan, respectively, up 32.50%/25.57%/20.12% year-on-year, net profit to mother of 0.403/0.527/0.659 billion yuan, respectively, up 92.67%/30.65%/25.01% year-on-year, and EPS of 1.03/1.34/1.68 yuan/share, respectively, corresponding to a three-year CAGR of 4 6.50%, giving a “buy” review grade.

Risk warning: Overseas market development falls short of expectations; risk of changes in overseas trade policies; risk of exchange rate fluctuations.