The company is a leading composite insulator company. It has entered the power insulation industry from the field of rubber seals. Through technological innovation, the company promoted the application of next-generation composite insulator technology, and achieved a continuous increase in the global share of composite insulators. In the domestic market, the company has outstanding advantages in the UHV field, and will benefit from this UHV construction boom.

Overseas, the company is an important supplier to international manufacturers such as GE, and will grow along with the development of overseas equipment companies. In the past, the company had a long-term presence overseas, providing insulation-related products and services to South American, North American and European power grid companies, and has achieved certain breakthroughs one after another. The company's overseas business currently accounts for more than half of its revenue and has a solid foundation. Its leading overseas layout is expected to accelerate the company's development. In addition to promoting composite insulation products, overseas companies are also actively promoting long-term innovative cross-cutting solutions. This solution has obvious advantages over the current model. If mass application starts, it is expected to drive the company's business scale to a new level.

A leading company in composite external insulation. The company was founded in 1996, starting with rubber seal products for substation equipment and entering the field of insulation. Currently, its main products are insulation products outside power systems. The company leads the market share of composite insulators and rubber seals, maintains an advantage in high-end fields such as UHV, and began overseas expansion earlier. The company was officially listed on the main board of the Shanghai Stock Exchange in August 2019.

The company's composite insulator products have room for improvement and benefit from UHV development. Insulators are a key component of power systems. According to the material, they are mainly divided into three categories: porcelain, glass, and composite. Composite insulators have a series of advantages. In the early days, composite insulators were gradually marginalized due to longevity issues, but Shenma-led companies promoted the successful application of next-generation composite insulators through technological innovation, and their market share has steadily increased. Currently, the share of composite insulators is close to 30-40%, and there is still plenty of room for improvement. The company participated in solving a series of bottlenecks in UHV insulation. It is a core supplier of UHV insulators, and has successfully provided more than 80% of composite insulator products for more than 70 UHV substations. The unconventional development of new energy in China has brought huge demand for UHV supporting construction. We expect that in the coming period, UHV construction will further accelerate, and the company will benefit significantly from this UHV construction boom.

Deeply involved in overseas markets and achieved breakthroughs, overseas business is expected to push the company to the next level. The company began overseas expansion very early, and its overseas advantages are quite strong. The company's overseas business revenue in 2023 was more than half. The company has established extensive business partnerships with internationally renowned electrical equipment suppliers such as GEV, Hitachi (formerly ABB Power Grid), and Siemens. In recent years, European and American power grid companies have begun to make large capital expenses, and orders from international equipment companies are growing rapidly. The company will benefit from the boom of equipment companies in these countries. At the same time, the company directly promotes insulation products and solutions to terminal power grid customers. At present, composite insulation products have achieved breakthroughs in the South American and North American markets and have begun to grow. In addition, the company's innovative cross-sharing plan has obvious advantages over the current model. The company has actively promoted pilot and model projects in many domestic and South American countries. If this solution is applied in batches, it is expected to drive the company's business scale to a new level.

Investment advice: It is predicted that in 2024 and 2025, the company will achieve net profit of 260 million or 40 million, which is covered for the first time with an “increase in wealth” rating.

Risk warning: grid investment falls short of expectations, overseas trade risks, fluctuating raw material prices.