CCA(SH:603100) Guotou Securities·2024-07-18 08:30Investment Rating - The report assigns a "Buy - A" rating to the company with a target price of 20.28 CNY for the next six months [5]. Core Views - The report highlights that Chuan Yi Co., Ltd. is a leading player in the domestic automation instrument sector, benefiting from national reforms, equipment upgrades, and a push for self-sufficiency in technology [10]. - The company has shown robust growth with a revenue and net profit CAGR of 15.47% and 29.33% from 2017 to 2023, respectively [1]. - The domestic market for automation instruments is expected to grow significantly due to the low current localization rate and increasing demand for domestic substitutes [4]. Summary by Sections Company Overview - Chuan Yi Co., Ltd. is recognized as the largest and most comprehensive industrial automation instrument company in China, with a strong focus on high-end markets [26]. - The company has established long-term partnerships with major industries such as petrochemicals, power generation, and metallurgy [26]. Industry Overview - The industrial automation control system sector is the largest sub-sector within the instrumentation industry, crucial for national economic security and industrial modernization [4]. - The domestic market for key products like pressure transmitters and control valves is valued at approximately 126 billion CNY, with a low localization rate, indicating substantial growth potential [4]. Competitive Advantages - The company has a comprehensive product line covering eight major categories, enabling it to provide complete industry solutions [3]. - Chuan Yi Co., Ltd. invests significantly in R&D, with a budget of 524 million CNY in 2023, representing a 15.16% increase year-on-year [3]. - The company has built a strong supply chain by manufacturing core components in-house, ensuring stability and security in its operations [3]. Catalysts - The ongoing state-owned enterprise reforms and policies promoting equipment upgrades are expected to boost capital expenditures in downstream industries, enhancing demand for automation instruments [10]. - The trend towards self-sufficiency in industrial instruments is gaining momentum, positioning Chuan Yi Co., Ltd. as a key player in the domestic market [10]. Financial Forecast and Valuation - The company is projected to achieve revenues of 81.32 billion CNY, 90.43 billion CNY, and 99.63 billion CNY for 2024, 2025, and 2026, respectively, with corresponding net profits of 8.00 billion CNY, 9.28 billion CNY, and 10.75 billion CNY [11].