Key points of investment:
The charging pile and energy storage industry may enter a period of accelerated construction. As a leading enterprise, the company has a comprehensive layout at home and abroad in recent years, and is expected to take the lead in benefiting from increased industry demand and drive the company's sales scale and profitability.
Starting with power quality equipment, performance continues to increase
The company was founded in 2007, starting with power quality equipment, but has continued to lay out the new energy business in recent years. At this stage, the business areas already cover the fields of new energy power conversion equipment, electric vehicle charging piles, and battery conversion; in 2023, the total proportion of the company's new energy conversion equipment and electric vehicle charging equipment reached 66%. Benefiting from the recovery in the charging pile and energy storage boom, the company maintained a high growth momentum of performance in 2023, and achieved a net profit of 40 million yuan in 2023, +80.2% over the same period last year.
The charging pile business is growing strongly, and technology and market breakthroughs continue
Benefiting from policy support and recovery in charging construction demand, the company's charging pile business achieved a high increase in 2023, with revenue reaching 850 million yuan, +99.6%; as a leading domestic charging pile and module company, the company has continued to increase in terms of customers and markets in recent years. At this stage, the company's main customers have covered energy customers, charging and switching operators, car companies and other market players; in overseas markets, the company's charging products have successively obtained European and American standard certifications, and the future is expected to enter the harvest period.
PCS performance advantages drive global energy storage market development
The 24Q1 domestic energy storage EPC tender data increased year on year. It is expected that the new installed capacity will increase by 51% year over year; at the end of February 2024, the scale of US large storage projects under construction will increase by 42% year on year, which is also expected to provide strong support for installed capacity growth. The company's products have advantages in terms of conversion efficiency and power quality through multi-branch, building block, and modular designs; according to CNESA, the company's PCS domestic shipments increased by about 266% year on year in 2023; overseas PCS shipments increased by about 67% year on year; the growth rate is at a high level among leading companies in the industry, highlighting the increase in market share brought about by the company's product and channel advantages.
Profit Forecasts, Valuations, and Ratings
We expect the company's revenue for 2024-2026 to be 37.8/47.6/5.66 billion yuan, respectively, with year-on-year growth rates of 42.5%/25.9%/18.9%, net profit to mother of 5.3/7.0/ 90 billion yuan respectively, year-on-year growth rates of 31.3%/32.4%/28.3%, EPS 1.7/2.3/2.9 yuan/share, respectively, and a 3-year CAGR of 31%. The absolute valuation method measures the value of the company per share at 39.20 yuan, which is 22 times the average PE of the company in 2024. Considering the company's high growth and combined with the industry's valuation level comprehensive relative valuation method, we gave the company 25 times PE in 2024, with a corresponding target price of 42.51 yuan/share and a market value of 13.2 billion yuan. For the first time, coverage gave a “buy” rating.
Risk warning: Charging pile construction falls short of expectations, demand in the energy storage industry falls short of expectations, and overseas progress falls short of expectations.