Zhitong Finance APP learned that CICC released a research report stating that they are initiating coverage on wasion holdings (03393) for the first time, with an outperform rating. The company is expected to have an EPS of 0.74/0.92 yuan for 2024-2025, with a CAGR of 32%. The target price is 8 Hong Kong dollars. The company is a leading enterprise in the energy metering and energy efficiency management field. The market is mainly concerned about the company's overseas meter deployment. The bank is optimistic about the company's overseas channel foundation, brand recognition supporting the company's diversified business expansion overseas, opening up growth space.

CICC's main points are as follows:

Comprehensive technical capabilities, providing overall solutions for energy metering and energy efficiency management.

Wasion Holdings focuses on three major business scenarios: energy metering, distribution, and energy storage, covering a complete range of 'cloud-network-edge' technologies. Compared with peers, its integrated competitiveness in 'chip + IoT + digitalization' stands out. Taking energy metering as an example, Wasion Holdings is the only professional manufacturer in China that can provide various advanced energy metering products, systems, and services for electricity, water, gas, heat, and other types of energy. It is also one of the few vendors that possess the ability to provide integrated digital solutions from chip design, data perception, edge computing, to ensuring high-speed data transmission, stable connections, and software management.

Accelerated overseas channels plus product diversification, broad growth space.

The company has been deeply cultivating overseas for many years with a leading localization layout, owning four major overseas production bases in Brazil, Tanzania, Mexico, and Hungary. From 2019 to 2023, the company's overseas revenue CAGR reached 66%, and in the first half of 2024, overseas revenue accounted for 28%. Looking ahead, at the industry level, the bank is bullish on the space for upgrading emerging market electrical infrastructure. At the company level, the bank is optimistic about the company's advantages in technology, brand, performance accumulation, cost-effectiveness, and its diversified strategic approach: 1) on the channel side, the existing bases expand horizontally to neighboring countries and actively prepare for new production capacity (Saudi Arabia, Indonesia); 2) on the product side, expanding from electricity meters to internet of things for electricity, urban IoT, distribution equipment, energy storage, and other diverse business scenarios.

Both domestic and overseas markets are working together.

The company is expected to have a high annual average bidding volume of 8,000 to 90 million electric meters for State Grid between 2024 and 2028, driven by replacement cycles and technological iterations. At the same time, the company will strengthen its efforts to explore external markets such as communication and commercial industries, and the domestic electric AMI business is expected to remain steady. Benefiting from the accelerated application of dual-mode technology in areas such as electrical metering and distribution substation, the domestic communication and fluid AMI business will also maintain rapid growth. For domestic ADO business, on the grid side, benefitting from the mild recovery in distribution network investments and the continuous improvement of the company's product variety and provincial network coverage, the company is bullish on business opportunities in the datacenter field. The company has industry major clients such as Alibaba and ByteDance.

Potential catalysts: Acceleration in overseas production capacity and order fulfillment, domestic electric meter bids exceeding expectations.