Core view: We believe that the core logic of the company's current growth is: 1) on the technology side, the company relies on power electronics technology to build three technology platforms, and the management focuses on R&D, common underlying technology across multiple businesses, and deep technical accumulation; 2) on the category side, expanding the business landscape horizontally and vertically through endogenous cultivation & epitaxial mergers and acquisitions, the company's traditional business is growing steadily, and segmentation is nurturing the incremental market; 3) On the market side, the company is the largest domestic power supplier, and has the advantages of rapid response and advanced manufacturing for mainland enterprises, superimposing India and overseas Thai factory layout, active global expansion Market; 4) The total power consumption of AI chips has changed dramatically, and cabinet server power supplies have room for both volume and price increases, and the company is expected to join hands with leaders to open up a third growth curve.

Megmeet's core strategy is:

On the technical side, platform-based strategic positioning, building three major technology platforms, and continuing to expand the business layout based on the homogeneity of technology, behind it is the acuity and execution of market demand.

On the market side, continue to explore opportunities in emerging markets, focus on segments in mature markets, bind leading customers in the industry, and strive to gain a leading position in all segments.

On the business side, endogenous cultivation & extrinsic mergers and acquisitions are combined, and the “investment-nurture-acquisition” incubation model is behind efficient management and integration capabilities. This unique, replicable model is the cornerstone that supports the company's continued growth, and the success of businesses such as smart bathrooms and smart welders has fully proven its viability.

Server power supply: Computing power expenses are transmitted to energy consumption, and we are working with leading companies to open up a third growth curve. As demand for computing power requirements increases exponentially and supply-side processes and architectures continue to iterate rapidly to drive a rapid rise in single-chip power consumption, the combination of the two has led to a sharp shift in the total power consumption of new chip products in recent years, and there is room for both volume and price increases for cabinet server power supplies. With years of experience in the power supply business, the company has entered the Nvidia supplier list and is expected to supply the Nvidia NV72 series. Assuming a conservative estimate of the company's market share of 5%, 12%, and 20%, and the revenue space corresponding to other companies' products is 1.65, 5.95, and 9.84 billion yuan. The company's server power supply profit is expected to be 0.33, 1.07, and 1.65 billion yuan, corresponding to the rest of the business elasticity.

Traditional business: Dig deep into segments, India and Thailand plants provide production capacity guarantees. In the field of inverter appliances, India's inverter home appliance market will continue to grow, driven by factors such as hot weather, increased consumption power, and weak competitiveness of local enterprises; in the smart equipment sector, the domestic social economy will resume normal operation in 2023. Domestic policies have driven a recovery in industrial production and investment demand, and the company's business demand has picked up accordingly. At present, the company's plant in India has achieved full local delivery, and the first phase of the Thai self-built factory will be put into trial production in the first quarter of next year to jointly provide production capacity guarantees.

New energy sector: Open the ceiling of growth and gradually expand applications. In the tram sector, new customers have introduced superimposed product lines, and the company's business volume has developed steadily. It has now established cooperation with automaker customers such as BAIC New Energy, Zero Run, Geely, Jinkang, Dongfeng, and FAW. In the field of new energy, the company adheres to the To-B position and lays out core components around inverters, energy storage, and wind power.

Profit forecast: On the revenue side, the company's revenue growth rate in 23 is 23%, and the growth rate is expected to be 19% in 24. If the traditional business growth rate is given a 14% growth rate in 25, it will still achieve a 34% year-on-year revenue growth rate after adding server power; on the profit side, the high threshold and high quality requirements of server power will bring performance improvements. If 40% gross margin is expected, the company's overall gross margin will be optimized by more than 1.5 pct year by year. The estimated net profit for 2024-2026 is 0.566/1.021/1.923 billion yuan, YoY -10%/+80%/+88%, corresponding to current PE 59, 32, and 17 times.

Risk warning:

Prices of upstream raw materials remain high: If the prices of upstream commodities and chips remain high, and the company is unable to fully transfer the pressure of rising raw materials to the downstream, it will put pressure on the company's cost side.

The expansion of the company's new energy power generation and energy storage business falls short of expectations: PV, wind power, energy storage and other businesses are the focus of the company's future development. If the expansion falls short of expectations, it will cause uncertainty about the company's future performance growth.

Electric vehicle sales fall short of expectations: The company's electric vehicle sector is in a stage of rapid development. If electric vehicle sales fall short of expectations, it will cause uncertainty about the company's electric vehicle sector's performance growth.

Global economic downturn: The company's customized power supply and industrial control business are highly related to macroeconomics. If the global economy is sluggish, it may put pressure on the company's customized power supply and industrial control business.