SANXING(SH:601567)2025-07-01 00:40Investment Rating - The report initiates coverage on Samsung Medical with a "Buy" rating and a target price of RMB 30.00 [1][4][5]. Core Insights - The company is a leading domestic manufacturer of medium and low voltage electrical equipment, primarily producing distribution transformers and smart meters. Despite a 25% decline in stock price year-to-date, the report anticipates a recovery in smart meter demand starting in 2026 due to a new replacement cycle. Additionally, strong overseas demand for distribution transformers may mitigate cyclical risks [1][12][45]. - The report projects a 27% CAGR for EPS from 2025 to 2027, with a 16% growth rate expected in 2025. The current stock price corresponds to a 9x PE for 2026E, below the historical average of 13.4x. The company maintains a stable dividend payout ratio of 55%, with expected dividend yields of 5-6% for 2025-2026 [1][4][12]. Summary by Sections Smart Meter Concerns - The report acknowledges concerns regarding smart meter demand in 2024 due to high base effects but expects a rebound in 2026. Historical data indicates that new standards typically lead to a drop in demand in the year of implementation, followed by growth in subsequent years. The company is also positioned to benefit from increasing market share in overseas smart meter and distribution transformer markets [2][13][16]. Medical Services Profitability - Approximately 20% of the company's revenue comes from rehabilitation hospitals. The average length of hospital stays in tertiary hospitals has decreased significantly, indicating a rising demand for rehabilitation services. The company’s bed occupancy rate is below the national average, suggesting potential for improvement in profitability [3][31]. Valuation - The report employs a Sum-of-the-Parts (SOTP) valuation method, arriving at a 12-month target price of RMB 30.00. The power equipment segment is valued at 11.5x forward PE, while the healthcare services segment is valued at 18x, aligning with industry averages. The target price implies a 12.4x PE for 2026E, with an expected EPS CAGR of 23% from 2024 to 2027 [4][46]. Revenue Growth Projections - The report forecasts a 26% CAGR for power equipment revenue from 2024 to 2027, driven by strong growth in distribution equipment (38% CAGR) and smart meters (8% CAGR). The overall revenue growth for the power equipment segment is expected to be supported by a 26% increase in orders [8][23][24]. Dividend and Cash Position - The company is in a net cash position, which supports its ability to pay dividends. The report anticipates a stable dividend payout ratio of at least 45% from 2025 to 2027, with an average payout ratio of 54% from 2020 to 2024 [38][41].