Leading energy and power company, first-mover advantage helps high performance growth
In 2023, the company's revenue was 51,573 billion yuan, up 10.13% year on year, net profit of 7.184 billion yuan, up 11.44% year on year; net profit of 7.650 billion yuan, up 10.79% year on year; gross profit margin of 26.80%, up 0.24 pct year on year; net cash flow from operating activities was 11.444 billion yuan, up 30.64% year on year, and cash flow from operating activities continued to improve. 2024Q1: Net profit to mother was 596 million yuan, up 13.69% year on year, net profit margin 7.85%, up 0.09 pct year on year.
Perfect industrial layout and rich product types
The company's main business includes four major business segments, including smart grids, digital energy integration, low-carbon energy, and industrial interconnection. The industrial layout around the new power system industry is perfect, and the resource allocation efficiency is high. The revenue share of each of the four major businesses in 2023 is as follows: smart grids account for 50%, digital energy integration accounts for 19%, low carbon energy accounts for 19%, and industrial connectivity accounts for 6%. The revenue of the four major businesses in 2023 was 256.35/111.34/96.38/3.69 billion yuan, respectively, with year-on-year growth of 2.57%/21.73%/33.47%/-3.01%, respectively.
The new business continues to be laid out, and technological breakthroughs drive the company to continuously upgrade the company's technical reserves in the flexible DC direction, which has significant advantages. As the penetration rate of flexible solutions in transmission and transformation projects continues to increase, the company will benefit significantly. The company's traditional dominant business continues to be consolidated while achieving greater industrial upgrading, and emerging businesses are developing at an accelerated pace. In the future, it will continue to focus on emerging fields such as IGBT, silicon carbide chips, energy storage, smart devices, and the industrial Internet to accelerate serial breakthroughs and large-scale development of emerging industries to help the company progress, transformation and upgrading.
Investment advice
We expect net profit to be 80.08/87.94/9.631 billion yuan in 2024-2026, respectively, and the corresponding PE will be 23.67/21.56/19.68, respectively, covered for the first time, and given a “buy” rating.
Risk warning
Risks of rising raw material prices; risk of new business development falling short of expectations; increased risk of industry competition; falling short of expectations in policy implementation, etc.