The power system industry has a comprehensive layout, crossing the industry cycle, and driving profit growth. The company is currently one of the few manufacturers in the transmission and distribution equipment industry that has R&D, manufacturing and solution capabilities for primary power systems (traditional mechanical power equipment), secondary equipment (controlled power equipment), power electronic equipment, etc. Total revenue in 2023 was 12.460 billion yuan, up 18.25% year on year; net profit due to mother was 1,559 billion yuan, up 27.75% year on year; non-net profit deducted from mother was 1,421 billion yuan, up 21.63% year on year; gross profit margin was 29.50%, up 3.17 pct year on year. 2024Q1's total revenue was 2,658 billion yuan, up 22.36% year on year; net profit to mother was 363 million yuan, up 66.32% year on year; deducted non-net profit of 341 million yuan, up 86.96% year on year; gross profit margin was 30.70%, up 4.48 pct year on year.
Product expansion helps collaborative development, with obvious advantages
In 2006, the company had only two major businesses, high-voltage switches and coils, accounting for 38% and 51% of revenue, respectively. Currently, it has formed five major businesses: switches, coils, reactive power compensation, smart devices, and general engineering contracts. In 2023, each business segment accounted for 45%, 22%, 15%, 8%, and 7%, respectively.
Overseas demand side makes efforts to drive the company's revenue growth
The company has been adhering to overseas strategies for a long time and continues to invest in products and markets. In 2023, overseas markets added 4.01 billion yuan in orders, an increase of 34% over the previous year.
Investment advice: growth can be expected, give a “buy” rating
We expect revenue from 2024 to 2026 to be 154.43/191.20/23.581 billion yuan, respectively, with corresponding growth rates of 23.9%/23.8%/23.3%; net profit to mother of 21.05/25.19/2,967 billion yuan, respectively, corresponding growth rates of 35.0%/19.7%/17.8%; corresponding PE 26.58/22.22/18.86, respectively. First coverage, giving a “buy” rating.
Risk warning
Market competition intensified; risk of exchange rate fluctuations; new products were not advancing as fast as expected.