首次覆盖，给予“增持”评级。公司下游布局大行业，开拓大客户，营销管理能力逐步提升，预计2024/2025/2026 年EPS 分别为1.86/2.18/2.65 元。考虑公司在公司管理及行业解决方案带来的营收质量提高，首次覆盖给予2024 年24.4X PE 估值，对应目标价45.30元，给予增持评级。Introduction to this report:
Benefiting from the big industry's big customer strategy, cost control capabilities have been further improved, and more industry solutions have blossomed.
Key points of investment:
Covered for the first time, a “gain” rating was given. The company lays out large downstream industries, develops large customers, and gradually improves marketing management capabilities. EPS is expected to be 1.86/2.18/2.65 yuan in 2024/2025/2026, respectively. Considering the improvement in revenue quality brought about by the company's management and industry solutions, the first coverage gave a PE valuation of 24.4X in 2024, corresponding to a target price of 45.30 yuan, and an increase in holdings rating.
The industrial control market has bottomed out and picked up, and domestic and foreign demand is improving. The small PLC market declined in 2023, but according to MIR's forecast, the small PLC market size will rise from 7.531 billion yuan to 8.621 billion yuan in 2024-2026, with an average annual CAGR of 6.9%. Domestic labor has declined, and the long-term positive trend of industrial automation has not changed. Coupled with the shift of the low-end manufacturing industry chain to emerging markets, it is becoming popular. For example, textile machinery exported 1.09 billion US dollars to the Asian market in the first half of 2024, accounting for 64.8%, and the year-on-year growth rate reached 19.8%. Increased domestic automation trends are compounded by industrial shifts in emerging markets overseas, and industrial control equipment has ushered in a positive situation in domestic and external demand.
Based on large industries and big customers, we benefit from the recovery of traditional industries. The downstream of the industry is scattered, and the company is deeply involved in large industries such as textile machinery, consumer electronics, packaging machinery, tissue machinery and other traditional industries. AI technology is being applied at an accelerated pace in the consumer electronics industry. The consumer electronics market is expected to reach 1977.2 billion yuan in 2024, with a year-on-year increase of 2.97%. The textile industry has benefited from the shift in the industrial chain and improved domestic demand. On the domestic side, retail sales of clothing have basically maintained a year-on-year growth rate of around 20% since the first half of 2023; in terms of exports, textile machinery began showing a marginal positive trend in May 2024. The year-on-year growth rate has been positive for two consecutive months, and the company has benefited from the recovery of the industry.
Core components have basically been self-supplied, and industry solutions have blossomed. Cost control capabilities have been further improved. Motors and encoders account for the main cost of servo products, accounting for 35% and 11% respectively. The core components division has basically achieved self-supply, further improving cost control capabilities. Relying on its own advantages in small PLC farms, it extends its product line to medium-sized PLCs and other industrial control products closely related to PLCs, stabilizes the dominant position of traditional industries, and at the same time accelerates expansion into industries such as new energy and high-end intelligent manufacturing, and gradually provides integrated solutions for the industry in the fields of photovoltaics, sponge cutting, and temperature control.
Risk warning. Product updates and iterations fall short of expectations, the competitive landscape intensifies; management falls short of expectations.