Wetown Electric(SH:688226) Shanghai Aijian Securities·2025-12-22 03:03Investment Rating - The report initiates coverage with a "Buy" rating for the company [2][7]. Core Views - The company is expected to see significant growth in revenue and profit, driven by strong demand in the data center sector and strategic partnerships, particularly with ABB [7][34]. - The company operates in three main business segments: distribution equipment (focusing on busbars), energy storage systems, and photovoltaic materials, with a strong emphasis on expanding its product lines and market reach [7][34]. Financial Data and Profit Forecast - Revenue projections for the company are as follows: - 2023: 2,848 million - 2024: 3,481 million (74.0% YoY growth) - 2025E: 3,777 million (22.2% YoY growth) - 2026E: 5,141 million (36.1% YoY growth) - 2027E: 6,312 million (22.8% YoY growth) [6][41] - Net profit forecasts are: - 2023: 120 million - 2024: 95 million (-21.2% YoY) - 2025E: 39 million (-58.7% YoY) - 2026E: 146 million (273.0% YoY) - 2027E: 221 million (51.1% YoY) [6][41] - The company’s gross margin is projected to fluctuate, with estimates of 17.7% in 2023, decreasing to 11.8% in 2025E, and recovering to 16.0% by 2027E [6][41]. Industry and Company Situation - The global data center installation is on the rise, which is expected to boost demand for power distribution systems, particularly smart busbars [7][34]. - The company has a strong market share in the busbar industry and has begun production in partnership with ABB, which is anticipated to enhance its overseas market presence [7][34]. - The photovoltaic welding strip segment is also expected to benefit from increasing global and domestic solar installations, with processing fees rising since the second half of 2025, positively impacting profitability [7][34]. - The energy storage business is primarily focused on grid-side and user-side storage, with a growing number of new projects being deployed globally [7][34]. Key Assumptions - Revenue growth for photovoltaic welding strips is expected to be 17% in 2025, 4% in 2026, and 0% in 2027 [7][34]. - Energy storage system revenue growth is projected at 50% in 2025, 100% in 2026, and 50% in 2027 [7][34]. - Busbar product revenue growth is anticipated to be 4% in 2025, 37% in 2026, and 20% in 2027 [7][34].