Author|Ding Zhenyu, Editor|Gu Jinfeng
Source: Jufeng Investment Advisory, Good Stock Application
Jufeng Investment Advisor's latest column "Leading Analysis" was officially launched. There will always be a sector or concept in the A-share market to lead the market to rise during the stage time, and this column will focus on the stocks with the highest popularity or the most consecutive stocks in the current market for analysis, with the aim of screening out the value investment targets with "real materials" from the hot spots.
Recently, when investors' eyes were attracted by hot sectors such as gold nonferrous metals, low-altitude economy, and solid-state batteries, the power equipment sector surprised many concept stocks today. Only to find that many stocks in the power sector have hit new highs in the past three years. The collective strength of the power sector is affected by the fact that China Xidian, Xu Ji Electric, Pinggao Electric, and Huaming Equipment disclosed their annual reports on the evening of April 10, and the company's performance was in line with or exceeded market expectations.
Today's intraday Ping Gaodian, Xu Ji Electric, Haixing Power, Huaming Equipment and other stock prices hit a new high in the past 3 years, especially Huaming Equipment has hit a new high since its listing, the stock price has fluctuated from 8 at the beginning of 2023, all the way to the top of the market, today's intraday hit a new high of 19.95 yuan, out of the bull stock market that has doubled in less than two years. What kind of company is this stock, and what is the main driving force for the stock price to rise? What kind of companies of the same type are worth paying attention to in A-shares? Let's take a look at the answer.
The company's main business in 2023 is as follows:
Huaming Equipment is a private family enterprise in Shanghai, and in 2015, the company was listed on the Shenzhen Stock Exchange through backdoor Fain CNC. The core business is the power equipment business, which has maintained more than 90% of the profit in the past three years. Its main products are the R&D, production, sales and operation and maintenance of transformer tap-changers. The products are widely used in all key links from power generation to power transmission and transformation to end users.
The tap-changer has a high entry threshold, and the company occupies a dominant position in the industry
The production technology of tap changer is difficult, although the product only accounts for 5%-15% of the total value of the transformer, but as the only live switching component in the substation, the safety requirements are strict, usually the product enters the market to obtain the approval of the end user and passes the stability test requires a long period, the first-mover has obvious advantages. The company has been deeply involved in market segmentation for 30 years, and since the acquisition of its largest domestic competitor, Long March Electric, in 2018, it has formed two production bases of the whole industry chain, established a leading position in terms of shipments in China and second in the world, and actively competed with overseas competitors for the global market. In addition, the company participated in the compilation and revision of the main industry and technical standards of tap-changers, undertook to fully grasp the core technology of UHV tap-changers, and has realized the operation of products in the field of UHV. Internationally, the company is a formal member of the IEEE Special Committee, participates in the preparation and discussion of relevant industry standards, and participates in the formulation of IEC standards. It can be seen that the company's technical level in the field of tap-changers is at a leading and low level in the industry.
The company benefited from the upward trend of power grid investment, and the market demand at home and abroad resonated
During the 14th Five-Year Plan period, the scale of domestic power grid investment will increase, and UHV and distribution networks will be the focus of construction. Factors such as the increase in the proportion of new energy power generation and the change of electricity load structure have led to the increasing complexity of the power grid structure, and the demand for accelerated upgrading and transformation of the power grid has increased significantly. In 2022, the State Grid plans to invest 501.2 billion yuan in the power grid, and in 2023, the State Grid investment will exceed 520 billion yuan, a record high, and the investment direction will focus on the digital transformation of the power grid, UHV and other fields. During the 14th Five-Year Plan period, the power grid investment will be 670 billion yuan, corresponding to an average annual investment of 134 billion yuan, of which the investment plan on the distribution network side will reach 320 billion yuan, accounting for 48%. Investment in the power grid continues to grow at a high rate.
The acceleration of investment in overseas power grids is conducive to the export of power equipment. The scale of investment in the European power grid has grown steadily, with an investment of about US$65 billion in 2022, a year-on-year increase of 4.8%. At the same time, the European Union proposed the "digitalization of the energy system" plan, and the European Commission plans to complete a cumulative investment of 584 billion euros in the power grid between 2020 and 2030, and it is expected that the growth rate of EU power grid investment is expected to accelerate in the future.
According to the General Administration of Customs, China's transformer exports in 2023 will be worth US$5.32 billion, a year-on-year increase of 19.8%. In the future, with the acceleration of overseas power grid construction, the scale of transformer exports is expected to further grow. The company actively explores overseas markets and seeks global layout. In 2021, the company set a goal of achieving overseas revenue of 60 million to 80 million US dollars in about 5 years. In the first half of 2023, benefiting from a low base and increased demand from individual markets, the company's overseas revenue reached 140 million yuan, a year-on-year increase of 170%. As the selling price of the company's export products is higher than that of domestic sales, the gross profit margin of the company's overseas business in 2023H1 will exceed 61%, which is higher than the domestic gross profit margin level of 53%.
The domestic market share is expected to further increase by conquering the UHV and nuclear power markets
1) In 2023, the company will complete the signing of commercial contracts for the mass sales of UHV products with customers, and plan to provide UHV products for the converter rheology project of Qingyang Station in Longdong, and the agreed number of products to be delivered is 7 sets (sets) to realize the stage of mass application in the field of UHV; in addition, the company will achieve the first breakthrough in the field of nuclear power in 2023. The value of a single unit in the UHV and nuclear power fields is relatively high, and with the gradual recognition of the product, it is expected to achieve a greater performance contribution, and the market share is expected to further increase from the current 60%.
Tianfeng Securities recently released a research report saying that it is expected that the promotion of relevant policies during the "14th Five-Year Plan" period is expected to bring a new round of growth cycle of mainland distribution network investment. Investment Opportunities - Optimistic about the relevant participating companies to benefit from the increased demand for distribution automation and obtain performance flexibility. The agency gives priority to recommending power distribution master station system suppliers with better market structure: Xu Ji Electric, Dongfang Electronics, Sifang Co., Ltd., and power distribution terminal link recommendation: Wasion Information.
Nanjing Securities Research Report pointed out that the source grid load storage is an important link in the new power system based on new energy, and its development relies on the promotion of incremental distribution network policies. Individual stocks can be paid attention to: Shenergy shares, Yangtze River Power, China Nuclear Power, etc.
Galaxy Securities released a research report to analyze: with the construction of the ubiquitous Internet of Things and the implementation of IR46 recommendations, the two network companies are expected to accelerate the bidding demand for high-precision meters above grade B in the future, and the value of a single meter is expected to gradually increase. In addition, the construction of smart grids at home and abroad has entered an upward boom space, and the domestic market will usher in a new round of stock replacement peaks in 2024-2025, and the high growth of overseas demand is expected to continue. It is recommended to focus on: Haixing Power, Samsung Medical, Linyang Energy, Wasion Information, Guodian NARI, Kelu Electronics, Juhua Technology, and Dongfang Electronics, which are in the forefront of the domestic State Grid and Southern Power Grid markets and continue to cash in overseas income.
(Author: Ding Zhenyu Practicing Certificate: A0680613040001)
Disclaimer: The above content is for reference only and does not constitute specific operation advice, and you shall operate at your own risk and profit and loss