Hsino Tower (SH:601096) Changjiang Securities·2024-12-30 01:18Investment Rating - The report initiates coverage with a "Buy" rating for the company [10][31]. Core Viewpoints - The company is positioned as a leading player in the domestic transmission tower industry, benefiting from the recovery in market demand, particularly in the context of high-voltage transmission projects and overseas market expansion [10][29]. - The company has shown stable revenue growth, with a compound annual growth rate (CAGR) of 15% from 2020 to 2023, and is expected to see a recovery in profitability in 2024 [7][75]. - The demand for transmission towers is anticipated to increase significantly due to heightened investment in power grid infrastructure, especially in ultra-high voltage projects [9][10]. Summary by Sections Company Overview - The company, formerly known as Hefei Jiadian Line Equipment Factory, has undergone multiple integrations to form the Hongsheng Huayuan Tower Group Co., Ltd., which successfully went public in 2023 [7]. - The company is primarily owned by the Shandong Electric Group under the China Electrical Equipment Group, with a stable revenue growth trajectory despite recent pressure on profit margins [7][10]. Product and Market Analysis - The main products include a full range of transmission line towers, with significant production capacity and utilization rates exceeding 100% [8][9]. - The market for transmission towers is expected to grow, with tender volumes from the State Grid increasing from 213 million tons in 2022 to 423 million tons in 2023, indicating a strong recovery [8][9][96]. - The company has a competitive edge in terms of production capacity, market share, and technological capabilities, positioning it well for future growth [9][10]. Financial Performance - The company’s revenue reached 92.95 billion yuan in 2023, with a projected net profit of 2.36 billion yuan in 2024, reflecting a recovery in profitability [10][75]. - The gross margin has been under pressure, declining from 20.87% in 2020 to 7.55% in 2023, but is expected to improve in the coming quarters [102][103]. - The company’s cost management has improved, with a decrease in overall expense ratios from 7.31% in 2020 to 5.27% in 2023 [103]. Future Outlook - The company is expected to benefit from the ongoing development of ultra-high voltage projects, with significant demand projected for transmission towers in the coming years [9][10]. - The overseas market is identified as a key growth area, with the company achieving 4.03 billion yuan in overseas revenue in 2023, accounting for 4.34% of total revenue [9][10].