Guoguang Electric (688776) 东吴证券·2025-02-16 23:34Investment Rating - The report assigns a "Buy" rating for the company, Guoguang Electric (688776), marking its first coverage in this regard [3]. Core Insights - Guoguang Electric is positioned as a leading supplier of microwave electronic devices and nuclear industry equipment in China, with a diversified and forward-looking business layout. The company has established itself as a major research and production base for microwave electronic devices and plays a crucial role in the nuclear industry, particularly in fusion equipment [2][3]. - The company's revenue and profit are expected to rebound in 2025, following a decline in 2023 due to industry-wide challenges. The projected net profits for 2024-2026 are 0.75 billion, 1.28 billion, and 1.67 billion CNY, respectively, with corresponding P/E ratios of 75, 44, and 34 [3][4]. Summary by Sections 1. Microwave and Nuclear Business Driving Growth - Guoguang Electric focuses on microwave and vacuum application products and nuclear industry supporting equipment, having a strong historical foundation since its establishment in 1958. The company has maintained growth in traditional products while developing high-standard nuclear industry equipment based on national strategic needs [2][11]. - The nuclear industry equipment is becoming the largest revenue contributor for the company, with a significant increase in its revenue share and gross margin over recent years [19][24]. 2. Nuclear Industry Equipment: Strong Demand from Fusion Projects - The ITER project, the largest global nuclear fusion experiment, creates a long-term demand for equipment due to its extended construction period. Guoguang Electric supplies critical components such as filters and shielding modules for ITER, which are essential for the stability of fusion reactions [26][29]. - China's advancements in controllable nuclear fusion projects, such as EAST and CFETR, further enhance the demand for nuclear industry equipment, with clear construction timelines and ignition plans [31][33]. 3. Microwave Devices: Essential for National Defense - Microwave devices are critical components in defense information systems, directly impacting the performance of military equipment. The demand for high-power, wideband, and efficient microwave electronic devices is expected to grow due to the increasing complexity of electromagnetic warfare [35][36]. - Guoguang Electric is one of the few domestic companies capable of producing microwave electronic devices, with significant technological advantages in various product categories [41][42]. 4. Profit Forecast and Investment Recommendations - The report anticipates a decline in revenue for microwave devices in 2024, followed by a recovery in subsequent years, with projected growth rates of -30%, +60%, and +15% from 2024 to 2026. The gross margins for this segment are expected to be 40%, 38%, and 36% respectively [47]. - For nuclear industry equipment, the expected growth rates are -15%, +30%, and +25% for the same period, with stable gross margins of around 40% [47].