China XD(SH:601179) Huaan Securities·2024-06-23 01:31Investment Rating - The report assigns a "Buy" rating for China West Electric (601179) for the first time [1]. Core Views - China West Electric is a leading enterprise in the field of power transmission and distribution equipment, showing stable and positive performance [1]. - The company has a strong competitive edge, ranking first in bids for both ultra-high voltage and power transmission and transformation equipment [1][20]. - The company is actively optimizing its overseas business layout, aiming to create growth points in international markets [1][23]. - The investment outlook is positive, with expectations of significant profit growth in the coming years [1][25]. Summary by Sections 1. Company Overview - China West Electric, established in 1953, specializes in manufacturing, research, and testing of power transmission and distribution equipment [6]. - The company has a stable shareholding structure and a wide regional layout with subsidiaries across various provinces and overseas markets [6]. 2. Performance and Growth - From 2018 to 2023, the company's revenue grew from 136.80 billion to 208.48 billion yuan, achieving a compound annual growth rate (CAGR) of 7.26% [7]. - The net profit attributable to the parent company increased from 5.69 billion to 8.85 billion yuan during the same period, with a CAGR of 7.64% [7]. - In Q1 2024, the company reported a revenue of 46.82 billion yuan, a year-on-year decline of 2.35%, while net profit increased by 7.27% [7]. 3. Market Position and Competitive Advantage - The company achieved a bid amount of 79.28 billion yuan for ultra-high voltage equipment in 2023, a year-on-year increase of 913.79%, capturing a market share of 19.56% [22]. - The company’s equipment is well-received in the market due to its strong technical performance and comprehensive solutions [20]. 4. International Expansion - The company has established manufacturing bases in countries such as Egypt, Indonesia, and Malaysia, enhancing its brand influence globally [23]. - As of October 2023, the company has signed contracts worth over 250 billion yuan in international markets, with production exceeding 150 units of power transmission and transformation equipment [23]. 5. Financial Projections - The projected net profits for 2024, 2025, and 2026 are 12.23 billion, 20.24 billion, and 25.15 billion yuan, respectively, with corresponding price-to-earnings (PE) ratios of 32, 19, and 16 times [25].