Author|Zhu Hualei,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.
This week, under the weak correction of the market, the power equipment sector has a strong trend, and many stocks in the sector have walked out of the long bull trend, among which Huaming Equipment, Haixing Power, Xu Ji Electric, Pinggao Electric and other stock prices have hit new highs in the past three years. The power equipment sector has collectively strengthened, and the main driving logic behind it is the continuous growth of domestic power grid investment and the acceleration of intelligent power distribution and power exports, which have brought about the growth of the performance of related power equipment companies.
At present, the stock prices of the above-mentioned companies are at a high level, and the risk of chasing is greater. Since the high prosperity of the power grid equipment industry is determined, and the performance growth of enterprises in the industry has remained stable, then the sector should be worthy of good analysis and mining by investors. Today, I want to analyze Dongfang Electric, which is also a leader in power equipment, whose stock price is currently at the bottom and whose performance has maintained high growth. At present, the company has the following three main highlights.
The company's leading position in power equipment is stable, and its market share has increased as a whole
From 2019 to 2023, the sales volume and market share of the company's steam turbine generator power stations, steam turbines, and power station boilers are as follows:
Source: Company announcement, compiled by Guosen Securities Economic Research Institute
Dongfang Electric is one of the main equipment manufacturers of coal-fired units in mainland China, with a complete energy equipment development system, and is in a leading position in the industry in many aspects such as 1000MW units of thermal power products and large-scale circulating fluidized bed boilers. In 2023, the company's sales volume of steam turbine generators, power station steam turbines, and power plant boilers will be 30.7/42.8/23.2GW, respectively, and the market share measured by production will be 61%/55%/35% respectively. In the past five years, the company's market share in domestic power equipment has gradually increased.
Pay attention to Jufeng Investment Advisor (jfinfo)/good stock application, and the analysis and research report of the leading target of "Institutional Research and Selection" is waiting for you to get!
Benefiting from the high prosperity of power equipment, the company's performance has grown steadily
The statistics of China's power grid investment from 2016 to 2023 are as follows:
Data from: Polaris Power Grid
In 2022, the investment in the power grid exceeded the 500 billion yuan mark for the first time, reaching 509.4 billion yuan. Based on the material bidding project data of the two major power grid companies of State Grid and China Southern Power Grid in 2023, we can see that the total investment amount has reached about 478,084.74 million yuan, an increase of about 27% compared with 2022. This significant growth not only reflects the high importance that the power industry attaches to infrastructure construction and equipment renewal, but also indicates that the power industry will continue to maintain a strong development momentum in the next few years. It is predicted that the investment in the power grid will remain at the level of more than 500 billion yuan in 2024. In the first four years of the "14th Five-Year Plan", the investment (including plans) of the State Grid has accumulated more than 2 trillion yuan, showing the country's firm determination and investment in the construction of the power grid, so the power equipment industry still maintains a high prosperity.
From 2019 to 2023, Dongfang Electric's performance is as follows
Data from: the company's annual report data
As a leader in thermal power equipment, Dongfang Electric's performance has been affected by the high prosperity of the industry, and its net profit has shown stable growth from 2019 to 2023, with an average annual compound growth rate of 29% in 4 years, and the company's performance has maintained stable and high growth.
The energy supply guarantee is superimposed on the growth of supporting demand, and the company's coal power orders are full
In 2023, 99.8GW of new coal-fired power will be started across the country, a year-on-year increase of 49%, and project construction has accelerated significantly. The company is one of the main equipment manufacturers of coal-fired units in mainland China, with a market share of about 40%. The company has a complete energy equipment research and development system, and is in the leading position in the industry in many aspects such as thermal power 1000MW units and large-scale circulating fluidized bed boilers. In 2023, the company signed new orders of 86.53 billion yuan, a year-on-year increase of 32%, a significant increase from 16% in 2022, of which the clean and efficient energy equipment business, which is dominated by coal power, signed new orders of 34.13 billion yuan, a year-on-year increase of 57%.
Overall, Dongfang Electric is a state-owned enterprise with stable performance and a gradual increase in domestic market share, and the power equipment industry benefits from the investment of the State Grid is still in a state of high prosperity, and the company's current orders in hand are sufficient, and the future performance growth is guaranteed.
The average valuation of the company in the past 3 years is 20 times, the company's latest price-earnings ratio is 14.5 times, which is at the bottom of the historical valuation, and a total of 4 brokerage institutions have made predictions on the company's 2024 performance in the past 6 months, and the average net profit of the company in 2024 is expected to be 4.4 billion yuan, a year-on-year increase of 19%, corresponding to a price-earnings ratio of 12 times. As a domestic power equipment leader, it can give the company a valuation of 15 to 20 times, and the company's target price in 2024 is 21 yuan to 26 yuan. At present, the stock price has risen with the power equipment sector, and its long-term investment cost performance ratio has gradually become prominent.
( Author: Zhu Hualei Practicing Certificate: A0680613030001 )
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