Comment:
1. The successful operation of domestic high-power inverters fully demonstrated the technical strength of radio, television, and electrical technology
The West-East Gas Pipeline Project required a 20-megawatt high-power compressor unit. Previously, China mainly relied on foreign giants such as Siemens, Toshiba and Mitsubishi to provide such inverters. In order to change this situation, the country initiated the localization process: Shanghai Electric, Radio, Television, Electric, and Shen Gu collaborated to develop motors, inverters, and compressors for the West East Gas Pipeline Line 2 Shaanxi Gaoling Station; Harbin Electric Power Plant, Rongxin Co., Ltd., and Shen Gu cooperated for the same type of equipment used in West-East Gas Pipeline Second Line Hubei Huangpi Station.
Radio and Television Electric received 4 orders, and Rongxin Co., Ltd. received 3 orders. The success of this test flight shows that Radio, Television, and Electric took the lead in completing localization and met the required targets. Future orders for the West-East Gas Pipeline Line 3 are just around the corner.
2. The West-East Gas Pipeline Project has begun, and the demand for high voltage frequency conversion is huge
According to the information we have tracked so far, there are currently 6 electric-drive pressure stations identified in the western section of the West Third Line, namely: Hongliu Link Pressure Station, Guazhou Pressure Station, Jiayuguan Distribution Pressure Station, Zhangye Pressure Station, Yongchang Pressure Station, and Gulang Pressure Station. All of its configurations use two drives to prepare one.
The situation in the eastern section of the West Third Line is that according to the situation on the West Second Line, we analyzed that Zaoyang Station may use a fuel drive. The remaining 10 pressure stations are expected to use electric drives, and all will use a three-by-one configuration. Based on 15 million yuan per set, the total amount reached 825 million yuan.
Since Radio, Television, Electric and Rongxin Co., Ltd. are the only two suppliers of high-power high-voltage converters for West-East Gas, we assume that the localization rate is at least 50%, then in the western section of the West Third Line, Radio, Television, and Electric will receive orders for at least 4 sets; in the West-East Gas Pipeline section, Radio and Television Electric will receive orders for at least 9 sets.
3. It is recommended to focus on the transactional opportunities brought about by the successful application of high voltage frequency conversion by Rongxin Co., Ltd.
Radio, Television, and Electric announced the news that a high-power high-voltage inverter was successfully tested at Gaoling Station in Shaanxi, which stimulated stock prices to rise and stop. We expect that the equipment developed by Rongxin Co., Ltd. will also be actually tested at Huangpi Station in Hubei in the near future. Rongxin Co., Ltd. also has excellent technical strength. We suggest paying attention to the trading opportunities brought about by Rongxin Co., Ltd.'s successful operation of high-power high-voltage frequency converters.
4. Profit forecasts and investment suggestions
We maintain our earlier view: considering the advancement of domestic pipeline construction, we expect the radio, television, electrical, and power electronics business to maintain a growth rate of more than 40% in recent years. However, the performance of Radio, Television, and Electric must return to a growth trajectory, its complete equipment business should gradually stabilize, and the component business should gradually achieve successful marketing. We expect the company's EPS for 2012-2014 to be $0.17, $0.22, and $0.27, respectively. Based on current stock prices, PE is 22 times, 17 times, and 14 times, respectively. We maintain our “Prudently Recommended” investment ratings.
