TBEA(SH:600089) HTSC·2026-01-29 05:45Investment 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 domestic power transmission sector, with significant growth in overseas orders and a robust domestic market outlook, supported by increased investment in the power grid [2][18]. Summary by Relevant 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 has seen rapid growth in international orders, with signed 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 47% increase in grid investment during the 14th Five-Year Plan, with TBEA's market share in main grid tenders continuing to rise [2][18]. Resource Products - The gold mining capacity is rapidly increasing, with projected production of 2.2 tons in 2024, rising to 3.6 tons by 2027, potentially generating revenues of 19.8 billion RMB to 46.4 billion RMB during this period, with significant year-on-year growth rates [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 profit margins [3][20]. - The polysilicon segment is anticipated to achieve cost reductions of approximately 18% in the first half of 2025, with cash costs around 30,000 RMB per ton, allowing the company to break even at the cash level [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]. - TBEA's extensive industry coverage and large scale make it challenging for market analysts to track all segments effectively, leading to a potential undervaluation of the company's growth prospects [5][22]. Financial Forecast and Valuation - The forecast for TBEA's net profit attributable to shareholders for 2025-2027 is 67.37 billion RMB, 76.30 billion RMB, and 104.66 billion RMB, with corresponding year-on-year growth rates of 62.9%, 13.3%, and 37.2% [6][10]. - The report employs a sum-of-the-parts (SOTP) valuation method, estimating a market capitalization target of 168.3 billion RMB, which aligns with the target price of 33.31 RMB [6][10].