The leader of visual intelligent operation and maintenance of domestic power grid has shown outstanding growth in recent years. The company mainly provides intelligent visual operation and maintenance management system for transmission, transformation and distribution, which is used to solve the problems such as low efficiency of manual inspection, hidden dangers and many kinds of defects, among which the transmission link is the core focus area of the company's current products. The company is based in Shandong Province, has successfully developed nearly 30 provinces and cities business, the national business map has been rolled out. In recent years, thanks to the continuous promotion of smart grid construction by the two major power grid companies, the company's business scale has expanded rapidly, with a compound revenue / performance growth rate of 52% and 48% respectively from 2016 to 2020. Financial indicators such as expense rate, ROE, debt ratio, cash flow and other financial indicators have excellent performance and high profit quality.

The policy continues to promote the development of smart grid, and there is a broad demand space for power visualization operation and maintenance. The traditional power operation and maintenance mode mainly inspects the power equipment qualitatively by means of manual and simple monitoring equipment, which has many pain points, such as high labor cost, heavy workload of patrol inspection and so on. With the increasing complexity of the power system and the continuous progress of the goal of building a strong smart grid and the Internet of things, the demand for intelligent operation and maintenance of the power system continues to rise. Since 2009, intelligent investment in China's power grid accounts for about 11% of the total investment scale of the power grid, and the proportion continues to increase. We estimate that the stock size of electric power intelligent visualization operation and maintenance market is about 70 billion yuan, and the annual update iterative dynamic market scale is expected to reach 10 billion yuan, the industry space is broad.

At the same time, the technical threshold of the industry is high, there are not many participants, and the business focus areas of each participant are also quite different. the electric power intelligent visualization operation and maintenance industry as a whole shows a diversified and prosperous development trend.

Strong R & D force continues to consolidate the advantages of algorithms, strong stickiness of major customers. The company continues to attach importance to R & D investment, R & D personnel account for about 1 stroke 3, R & D expenditure rate is about 8%, in line with industry trends and customer needs to develop a series of outstanding technical achievements. In 2019, the company cooperated with Huawei to launch the joint solution of power scene AI application, and the products equipped with Huawei Atlas200 AI acceleration module are gradually widely used. The company is an early company in the industry to launch transmission line channel visualization related products, and has accumulated a large number of application scene data pictures in its long-term cooperation with State Grid, providing a rich training set for algorithm models, continuously improving model identification accuracy and reliability, and forming obvious competition barriers to new entrants in data sources. On this basis, the company's product performance is leading in the industry, and the related products have passed the strict testing of China Electric Power Research Institute or State Grid Electric Power Research Institute, and the quality is stable and reliable. Due to the high requirements for security and reliability of the power system, the company relies on the leading technical strength, high brand awareness and rich industry experience to effectively supplement the operation and maintenance strength of the power grid company, and the stickiness of the customers of the national power grid and southern power grid continues to enhance.

The national market is expected to continue to infiltrate, and there is a broad space for horizontal extension of business. The future growth power of the company is relatively sufficient: 1) remote expansion: there is a broad space for visual operation and maintenance of electric power, and the national permeability of the company, as an industry leader, is expected to continue to improve. 2017-2020H1's revenue from Shandong Province accounts for 44%, 34%, 29%, 18%, respectively, the proportion of business in the province is decreasing year by year, and the nationalization business has been successfully launched. After listing, the company is expected to continue to deepen regional market development. 2) horizontal extension: at present, the company's products are mainly based on AI algorithm to provide intelligent operation and maintenance solutions to solve the problems of manual inspection and inefficiency in the electric power field, and can be extended to linear infrastructure fields such as rail transit, telecommunications, water conservancy and so on, to expand new business growth points. 3) Product iteration: according to the bidding technical specifications of power grid companies, the service life of transmission operation and maintenance related products is generally 5-10 years, and customers usually choose to update products to achieve iterative upgrade of operation and maintenance system when they reach their service deadline. in the future, product upgrading is expected to become an important driving force for the company's long-term growth.

Investment suggestion: we predict that the company's return net profit from 2021 to 2023 will be 1.30 PE 1.82 / 251 million yuan respectively, with an increase of 41% over the same period last year. 40% pedigree 38% primeEPS will be 1.64 yuan for 0.85 pound 1.19 pound, and 40% for 2020-2023. The current stock price corresponds to PE times 21-15-11. Considering the company's outstanding competitive advantage and excellent growth, the company is given a "Buy" rating for the first time.

Risk hint: the power industry depends on risk, the market competition aggravates the risk, the policy change risk of regional power grid companies and so on.