Civilian electricians have a broad landscape, and the new energy business is also a leading domestic manufacturer of civilian electrical products. The company initially focused on R&D, production and sales of civil electrical products with converters and wall switches and sockets as the core. Since then, it has gradually expanded its business field with comprehensive advantages such as product research and development, channel coverage, brand marketing, and supply chain. It has now formed three major business segments: electrical connections (converter+digital accessories, etc.), smart electrical lighting (wall switch+LED lighting+smart headlight+ecological category), and new energy (energy storage business+new energy charging piles, etc.), and has actively become a leader in the international civil electrical industry. In 2016-2023, the company's revenue increased from 5.366 billion yuan to 15.695 billion yuan, with a CAGR of 14.36%; net profit to mother increased from 1.407 billion yuan to 3.87 billion yuan, and the CAGR was 13.48%. In the first three quarters of 2024, the company achieved operating income of 12.603 billion yuan, an increase of 8.58% year on year; net profit to mother of 3.263 billion yuan, an increase of 16.00% year on year, and performance continued to grow steadily.

Electric connection: superior products increase revenue, cash cow business development is steady 1) Converter: Bull converter has gone through development and innovation in the three directions of product positioning innovation, channel model innovation and expansion, and dealer management, and has upgraded product series loved by users, such as rail sockets and Gen Z series sockets. 2) Digital accessories: Bull Digital adheres to the third-party boutique strategy. Based on in-depth exploration of electricity demand in all scenarios and keen insight into market trends, Bull Digital has launched a series of innovative products.

Smart electrical lighting: transformation of decorative retail channels, smart ecology may break the game 1) Wall switch: In 2023, the company promoted the transformation of decoration channels, sank electrical lighting products such as wall switches and sockets, LED lighting, household appliances, headlights, smart door locks, etc. into the county market, and launched the construction layout of all categories of flagship stores, which strongly drove the development of all categories. 2) LED lighting: In 2014, relying on channels and brand advantages, the company began to enter the LED lighting field, grasping changes in consumer demand, and continuously expanding the product category, gradually expanding from bulbs and downlights to more lighting products such as light strips, light stickers, ceiling lamps, etc., and sales revenue grew rapidly. 3) Smart headlamp: In order to meet consumers' one-stop purchase needs in the home front decoration stage, the company is transforming from providing products to providing better and better scenario solutions, and promotes the rapid development of the headless lamp business by operating under the dual brands Bull and Muguang.

New energy: Enrich innovative product lines and undertake medium- to long-term development

1) New energy vehicle charging business: The company focuses on a comprehensive scenario-based charging and discharging experience for electric vehicles, and continuously improves the new energy business product layout. In terms of charging gun and charging pile business, the company launched a series of products based on the different characteristics of the B-side and C-end to achieve use in various battery charging scenarios such as fixed charging, multi-point fast charging, and portable charging. 2) Energy storage business: In terms of energy storage business, the company launched household energy storage and industrial and commercial energy storage products separately for the European and domestic markets. Taking industrial and commercial energy storage as an example, the company introduced 125KW and 230kWh liquid-cooled industrial and commercial energy storage cabinets, which can greatly meet the needs of domestic small and medium-sized commercial users for new energy storage and industrial peak valley distribution.

From the channel side, for the C-side market, the company is actively expanding professional distributors such as new energy auto trade stores and beauty decoration stores.

Investment advice

We are optimistic that the company will promote steady growth in the electrical connection business and intelligent lighting business based on the market share and channels accumulated by the commercial electrician market share and channels accumulated by converters and wall openers. With the further channel transformation and expansion of the LED lighting business, the smart home ecosystem and headlamp business are expected to improve. In addition, actively promoting internationalization strategies and expanding the new energy market, it is expected to lead to medium- to long-term performance growth.

We expect the company's revenue for 2024-2026 to be 17.077/18.674/20.325 billion yuan, respectively, up 8.8%/9.4%/8.8% year-on-year, and net profit to mother of 4.306/4.774/5.276 billion yuan, respectively, up 11.3%/10.9%/10.5% year-on-year respectively. As of December 23, 2024, EPS was 3.33/3.69/4.08 yuan respectively, and the corresponding PE was 21.52/19.42/17.57 times, respectively. First coverage, giving a “buy” rating.

Risk Alerts

There is a risk that macroeconomic growth will slow down, market competition will increase the risk, the risk of new business development falling short of expectations, the risk of new channels and new market development falling short of expectations, and the risk of raw material price fluctuations.