Report guide
Taking advantage of the rapid growth of the “14th Five-Year Plan” power Internet of Things transformation and intelligent power grid upgrading, customized technological innovation capabilities have created a high Maori moat.
Key points of investment
China's power grid is entering the “Internet of Things” informatization construction stage at an accelerated pace, and the intelligent transformation of power grids will continue to increase. It is estimated that the total investment in power information and communication will reach 82 billion yuan in 2025, and the 5-year compound growth rate will reach 14%. It is estimated that between 2020 and 2030, China will add or renovate more than 7,000 intelligent substations, and the market capacity of substation system monitoring products will exceed 50 billion yuan. Zhejiang Province (pilot province for intelligent power grids), where the company is deeply involved, currently has a low penetration rate of intelligent monitoring of substation equipment. The potential market space inside and outside the province is huge, and demand growth in the industry is growing rapidly in the early stages of growth.
Category extension: The company has strong software and hardware development capabilities, rapid iteration of product range expansion and functional innovation, and timely meeting the needs of intelligent power grid upgrades. Regional expansion: The company has been deeply involved in Zhejiang for many years, accounting for more than 50% of cities in the province. As demand for intelligent transformation of substations in other provinces in China quickly follows, the company is expected to show first-mover advantage and expand the national market on a large scale with its leading technical strength, high-quality service team, and brand influence that was further enhanced after listing. Field expansion:
The company's core technology is highly scalable. It is expected to further develop the 100 billion level market for intelligent construction and transformation of power transmission and distribution, and is even expected to extend to intelligent IoT fields such as medical care, military industry, and environmental protection in the medium to long term.
High technical channel barriers: With leading technological innovation capabilities, the company has established close industry-university-research cooperation with local universities and research institutes to continuously consolidate the technology moat in the field of intelligent sensing and diagnostic early warning device products for electrical equipment. Furthermore, the company's products are highly customized and equipped with professional technical service teams, and have high barriers such as quick response to customer needs and deep customer channel cultivation. Strong profitability: The core value of the product lies in the high premium brought about by software superimposing customized products. The gross margin of many of the company's products exceeds 70%. Furthermore, in order to focus on the asset-light business model of R&D and assembly, ROE and net interest rates have all maintained high levels.
Profit forecasting and valuation
Benefiting from the acceleration of the intelligent upgrading of power grids across the country, the company's net profit is expected to reach 138/195/264 million yuan in 2021-2023, an increase of 30.6%/41.0%/35.6% over the previous year, and EPS of 2.47/3.49/4.73 yuan. The company's performance growth rate/profitability are superior to the industry average. The company was given 25.6 times PE in 2022, corresponding to the target price of 89.3 yuan/share. There is room for an increase in the current price of 110.4%, giving the company a buying rating.
Risk warning
Business expansion outside Zhejiang Province falls short of anticipated risks; risk of rising raw material prices; intelligent power grids fall short of anticipated risks.!