Electric substation intelligent monitoring faucet,”

“Energy storage+perovskite” contributes to a new growth pole

① The leader in intelligent substation monitoring is deeply involved in smart grids and is actively expanding new energy storage and photovoltaic businesses. Since the establishment of the company in 2002, the company has been committed to the R&D, production and sales of electrical equipment sensing and early warning devices and energy storage systems, and provides electricity-related technical services and comprehensive solutions. At present, the company has formed dozens of intelligent monitoring series products and a digital platform for online diagnosis and early warning covering the entire “transmission, transformation, and distribution” link and all voltage levels of “high voltage, ultra-high voltage, and ultra-high voltage”. In 2022, the company launched a high-energy density electrochemical energy storage system and safety protection platform to develop a new energy storage business. In 2023, the company invested in a 100MW perovskite battery production line to lay out a new photovoltaic business, contributing a new growth pole to the company's development.

② Revenue is growing steadily, and R&D investment continues to be increased to enhance competitiveness. In 2023, the company achieved revenue of 202 million yuan, an increase of 6.28% over the previous year, and realized net profit of 46 million yuan, a year-on-year decrease of 18.57%. The decline in net profit due to continuous technological changes and innovation, and continued growth in R&D investment. As the company continues to cultivate in the field of intelligent sensing and diagnosis and early warning devices for electrical equipment and accelerate the development of the electrochemical energy storage equipment business and perovskite photovoltaic business, it is expected that the company's profits will continue to grow.

In line with the intelligent development trend of power grids, there is plenty of room for growth in smart substation products. Domestic grid investment reached 5275 billion yuan in 2023, and the smart grid market size continued to grow under the impetus of policy. Currently, the company's main products include power equipment testing and technical services, electrochemical energy storage systems, and power-related technical services. In 2022, power equipment testing and technical services accounted for 65.5% of revenue, which is the company's main source of revenue. Substation products contribute the main revenue of the power equipment inspection and technical service business. The company's core advantage product, substation electrical equipment, is widely used in the first batch of pilot intelligent substation demonstration stations in power grids and key projects such as ultra-high voltage. The State Grid plans to upgrade a total of 7450 intelligent substations during the period 2020-2025. The total market space corresponding to the addition and transformation of domestic intelligent substation online monitoring systems in 2020-2025 reached 54.444 billion yuan.

Driven by the policy market, the energy storage business opens up room for growth

Energy storage plays a key regulatory role in energy use scenarios such as promoting large-scale development and consumption of new energy sources and supporting the safe and stable operation of power grids. The various advantages of electrochemical energy storage systems make them suitable for energy use scenarios such as power generation side, grid side, and electricity consumption side of renewable energy with high fluctuations such as light and wind power generation. Driven by both policy and market, the market for electrochemical energy storage systems is growing rapidly. The National Energy Administration predicts that by 2025, the installed capacity of the new energy storage will reach more than 30 GW. The energy storage system business is highly collaborative with the company's main business, which can serve the power system and improve the safety of power grid operation. The company has accumulated IoT and big data technology, rich experience in integrating electrical and mechanical systems, and combined with AI intelligence and big data analysis technology to launch commercial energy storage systems and application platforms. In November 2023, the company built a production line with an annual output of 2 GWh of energy storage products to be deployed on the user side and the power grid side to achieve distributed energy storage.

Lay out a new type of photovoltaic perovskite business and start a new growth curve Perovskite batteries are novel compound thin-film solar cells that use perovskite-type materials as light-absorbing layers. Compared to crystalline silicon, perovskite batteries have a higher efficiency limit (33%) and lower module cost (limit 0.5-0.6 yuan/W), and are expected to be used on a large scale in terrestrial power plants and distributed photovoltaics in the future. Currently, perovskite batteries are in the early stages of industrialization, and in the short term, the power plant side is not economical compared to crystalline silicon. However, it can compete differently with crystal silicon in a wide range of BIPV scenarios with its excellent light transmission, color, and flexibility. According to our estimates, the installed capacity of the BIPV market is expected to reach 201GW in 2028. If the penetration rate of perovskite components reaches 20%, the installed capacity can reach 40GW, and the market space is broad. In November 2023, the company actively laid out the photovoltaic module business and invested in the construction of a 100MW perovskite battery production line, opening a new growth curve. Most of the pilot lines in the perovskite industry focus on R&D. Actual production capacity is insufficient to handle the impending BIPV demand. If the company's 100 megawatt production line can be successfully put into operation, it will be one of the few perovskite manufacturing targets among listed companies, and it is highly scarce.

Covered for the first time, a “gain” rating was given. The company continues to be deeply involved in the smart grid field. It already has a strong market position in this field, and while continuing to develop the energy storage system business, it is expanding into the perovskite photovoltaic field, improving and expanding the company's industrial chain and opening up room for the company's long-term growth. The company's revenue for 2023-2025 is estimated to be 2.02, 5.27, and 1.02 billion yuan, respectively, and net profit attributable to mother is 0.46, 1.11, and 163 million yuan, respectively. The PE corresponding to the closing price on March 21, 2024 is 54, 23, and 15 times, respectively. Give it an “gain” rating.

Risk warning: Risk of smart grid operating investment falling short of expectations; risk of energy storage business development falling short of expectations; risk of new perovskite photovoltaic projects falling short of expectations; risk of deviations in industry scale estimates; risk of untimely updates of information used in research reports, etc.