xinje(SH:603416) Guotai Junan Securities·2024-08-20 13:10Investment Rating - The report initiates coverage with a "Buy" rating and sets a target price of 45.30 CNY for the stock [2][10]. Core Views - The company benefits from a large industry client strategy, enhanced cost control capabilities, and diversified industry solutions [2][3]. - The expected earnings per share (EPS) for 2024, 2025, and 2026 are projected to be 1.86 CNY, 2.18 CNY, and 2.65 CNY respectively [3][19]. - The report highlights a recovery in the industrial automation market, with domestic and international demand improving [3][7]. Financial Summary - Revenue is forecasted to grow from 1,335 million CNY in 2022 to 2,468 million CNY by 2026, reflecting a compound annual growth rate (CAGR) of 17.7% [3][19]. - Net profit attributable to the parent company is expected to increase from 222 million CNY in 2022 to 372 million CNY in 2026, with a notable growth of 31.4% in 2024 [3][19]. - The price-to-earnings (P/E) ratio is projected to decrease from 19.17 in 2022 to 11.43 in 2026, indicating improved valuation over time [3][19]. Industry Insights - The small PLC market is anticipated to recover, with the market size expected to grow from 75.31 billion CNY in 2024 to 86.21 billion CNY by 2026, representing a CAGR of 6.9% [3][7]. - The company is positioned to benefit from the ongoing trend of labor cost increases in China and the shift of low-end manufacturing to emerging markets [7][19]. - The report emphasizes the company's focus on large industry clients in traditional sectors such as textile machinery, consumer electronics, and packaging machinery, which are showing signs of recovery [3][7].