Newsletter summary

Revenue of power grid equipment sector increased by 16% in 2023Tedsarcade.47%, with significant growth in overseas business and improved profitabilityTedsarcadeThe construction of a new power system drives the demand for various equipment; overseas market opportunities drive performance; it is suggested to pay attention to primary equipment such as Pinggao Electric and secondary equipment such as Oriental Electronics. Risks include lower-than-expected grid investment.

Text of news flash

[revenue from the power grid equipment sector increased by 16% in 2023 compared with the same period last year.Tedsarcade.47%, net profit up 30.29% over the same period last year]

The power grid equipment sector showed a strong growth momentum in 2023, and despite the traditional off-season in the first quarter, the performance of the sector is still bright. Through the analysis of the financial data of 17 power grid equipment companies, the total revenue of the plate in 2023 increased by 16.47% compared with the same period last year, and the proportion of overseas revenue reached 10.46%. Entering the first quarter of 2024, on the basis of the high growth of the previous year, sector revenue and net profit respectively achieved 13.40% and 30.29% year-on-year growth, indicating that the prosperity of the industry continues to rise.

The improvement of the profitability of the sector is mainly due to the optimization of the product structure of enterprises, the increase of demand downstream of the industry, the stability of raw material prices and the dilution of income scale effect on expenses. The average period expense rate of listed companies decreased by 0.27% compared with the same period last year, the average gross profit margin increased by 2.19% year-on-year, and the average net profit margin increased by 0.98%.

[the construction of a new power system promotes the growth of equipment demand in all links]

With the acceleration of the construction of new energy system and power system, the investment in power equipment continues to increase. The access proportion of clean energy on the power side is increased, and the regulation and support capacity of the power grid is proposed.TedsarcadeHigher requirements have been made. The construction of UHV main grid is being promoted to facilitate the cross-regional allocation of power resources. At the same time, the large-scale access of new distribution network resources, such as distributed energy and electric vehicles, is promoting the upgrading of the distribution network, from the traditional one-way passive network to two-way interactive system. In addition, the trend of intelligent distribution network and electrification of energy consumption is also promoting the demand for energy-using terminal metering equipment.

[the performance of overseas enterprises hit a new high in 2023]

Driven by the global "net zero" goal, the share of wind power and photovoltaic units continues to rise, and the electricity demand of overseas manufacturing is also on the rise. The demand for power grid upgrading caused by geopolitical conflicts has led to a sustained boom in the overseas power equipment market. Developed countries are reconstructing power networks, while less developed countries are speeding up infrastructure construction. Overseas business revenue of overseas enterprises has increased significantly compared with the same period last year, and the gross profit margin of overseas business is generally higher than that of domestic business, and the increase in the proportion of overseas business is expected to further increase the profit space of enterprises.

[investment suggestions pay attention to high-quality enterprises in related fields]

For investors, it is recommended to pay attention to Pinggao Electric (600312) and Huaming equipment (002270). The beneficiaries include China West Electric (601179), Siyuan Electric (002028), Jinpan Technology, Igor (002922) and Mingyang Electric. In terms of secondary equipment, Dongfang Electronics (000682) is worthy of attention, and the beneficiaries are Xu Ji Electric (000400), Guodian Nanrui (600406) and Sifang shares (601126). The benefit targets for metering equipment include Haixing Electric Power (603556), Samsung Medical (601567), Weisheng Information and Juhua Technology (300360). In terms of line equipment, companies such as Jinbei Electric (002533) and Huatong Cable are also worthy of attention.

[risk reminder involves many aspects]

Although the grid equipment sector has shown strong growth momentum, investors should also be aware of some of the risks. The progress of power grid investment and UHV construction may not be as expected, and the risk of market competition can not be ignored. In addition, changes in the overseas investment environment and financial and exchange rate risks may also have an impact on corporate performance.