xinje(SH:603416) SINOLINK SECURITIES·2025-08-05 08:40Investment Rating - The report initiates coverage with a "Buy" rating for the company, assigning a target price of 71.25 RMB per share based on a 40x PE valuation for 2025 [5]. Core Views - The company is positioned to benefit from the recovery of the automation cycle, expansion into new fields, and direct sales to major clients, which are seen as three driving forces for growth [3]. - The company holds leading market shares in small PLCs and servo systems, with a market share of 7.6% and 3.7% respectively, indicating a solid foundation for future growth [4]. - The automation market is expected to recover, with a slight positive growth of 2% in Q1 2025 after nine consecutive quarters of decline, driven by equipment updates and digital transformation policies [3][4]. Summary by Sections Basic Situation - The company has over 20 years of experience in the industrial automation field, focusing on PLC and servo systems, which form its core competitive advantage [14]. - The company has established a comprehensive product matrix covering PLCs, drive systems, human-machine interfaces, and smart devices, with PLCs and drive systems contributing over 80% of revenue [15][17]. - The domestic small PLC market was valued at approximately 7.86 billion RMB in 2024, with a recovery in demand expected in 2025 [31]. Growth Drivers - The company is expanding its product lines into medium and large PLCs and frequency converters, with expected sales growth of 40-50% in 2025 [5]. - The company has launched new products in humanoid robotics and is leveraging the Wuxi industrial cluster to accelerate industrialization [5]. - The company has deepened its direct sales strategy, with over 80 major clients established by the end of 2024, contributing to a revenue increase of 25.8% [61]. Profit Forecast and Valuation - The company is projected to achieve net profits of 280 million RMB, 348 million RMB, and 418 million RMB for 2025, 2026, and 2027 respectively, with year-on-year growth rates of 22.5%, 24.4%, and 20.0% [5]. - The report highlights the company's strong market position and growth potential in the automation sector, particularly in the context of the recovery of the automation market and the expansion into new industries [5].