TBEA(SH:600089) HTSC·2026-01-29 04:07Investment Rating - The report initiates coverage on TBEA Co., Ltd. with a "Buy" rating and sets a target price of 33.31 RMB, corresponding to a 2026 PE of 22X [1][7]. Core Views - The report highlights that TBEA's multiple business segments are entering a phase of upward momentum, with the power transmission and transformation business expected to benefit from global high-pressure equipment shortages, leading to accelerated international expansion [1][17]. - The gold business is experiencing simultaneous increases in both volume and price, while coal and polysilicon sectors are also showing signs of recovery, indicating strong upward profit elasticity for the company in 2026-2027 [1][17]. - The report emphasizes that TBEA is a leading player in the energy equipment sector, with a diversified portfolio that includes power transmission, energy, new energy, and new materials, positioning the company for robust growth [23]. Summary by Sections Power Transmission and Transformation - TBEA is a leading private transformer manufacturer in China, with integrated capabilities in high-voltage cables, accessories, and construction services. The company is witnessing rapid growth in overseas orders, with international market product contracts exceeding 7 billion USD in 2023 and 12 billion USD in 2024, reflecting a year-on-year growth of 65.9% in the first half of 2025 [2][18]. - The domestic market is also expected to see a significant increase in grid investment during the 14th Five-Year Plan, with TBEA's market share in main grid tenders continuing to rise, providing a solid foundation for future growth [2][18]. Resource Products - The gold mining segment is currently in a rapid capacity release phase, with projected production increasing from 2.2 tons in 2024 to 3.6 tons in 2027, potentially generating revenues of 19.8 billion RMB to 46.4 billion RMB during this period, with year-on-year growth rates of 65.9% to 29.2% [3][19]. - TBEA's coal business benefits from low-cost open-pit mining resources, with a production cost of only 177 RMB per ton in the first half of 2025. The company is also developing a coal-to-gas project that is expected to enhance profitability [3][20]. - The polysilicon segment is anticipated to achieve significant cost reductions, with cash costs expected to decrease by approximately 18% in the first half of 2025, allowing the company to return to cash flow breakeven [4][21]. Market Perspective - The report notes a divergence from market perceptions, indicating that TBEA's diverse business segments are now in an upward cycle, contrary to the prevailing view that the company is being dragged down by its renewable energy and coal businesses [5][22]. - The company is positioned to leverage its strengths in various sectors, including power transmission, coal-to-gas, gold production, and polysilicon, to drive future growth and profitability [5][22].