Kewell(688551) China Post Securities·2024-02-22 16:00Investment Rating - The report gives a "Buy" rating for the company, indicating a positive outlook based on growth potential and market positioning [60][61]. Core Insights - The company is a leading domestic testing power supply enterprise, expanding into semiconductor and hydrogen energy sectors to achieve a second growth curve [60]. - The company has seen robust performance with a compound annual growth rate (CAGR) of 30.6% in revenue and 9.2% in net profit from 2017 to 2022, with further growth expected in 2023 [9][11]. - The company ranks fourth globally in testing power supply sales in 2022, with a projected market space of 4.76 billion in the photovoltaic and electric vehicle testing power supply sectors by 2025 [25][60]. Summary by Sections 1. Expansion into Semiconductor and Hydrogen Energy - The company has strategically expanded from its core testing power supply products into the semiconductor and hydrogen energy sectors, leveraging partnerships with key industry players [3][60]. - The company aims to standardize and diversify its product offerings, particularly in small power testing supplies, to enhance market reach [25][60]. 2. Performance and Profitability - The company reported a revenue of 360 million and a net profit of 80 million in the first three quarters of 2023, reflecting year-on-year growth of 40.1% and 66.5% respectively [9][11]. - The gross margin and net margin for the first three quarters of 2023 were 54.6% and 21.0%, showing improvements due to high-margin product sales and operational efficiencies [11][19]. 3. IGBT Market and Domestic Replacement - The IGBT market in China has a self-sufficiency rate of less than 30%, presenting opportunities for domestic manufacturers to capture market share through local production [28][42]. - The company has made strategic acquisitions to enhance its capabilities in the IGBT packaging and testing segments, furthering its competitive position in the market [28][60]. 4. Hydrogen Energy Sector Growth - The hydrogen energy sector is expected to grow significantly, with the company positioned to benefit from increasing demand for hydrogen production and fuel cell applications [39][56]. - The company is the market leader in hydrogen fuel cell testing equipment, with a projected market size of 2 billion for hydrogen fuel cell testing devices by 2025 [60][70]. 5. Financial Projections - The company forecasts revenues of 532 million, 773 million, and 1.08 billion for 2023, 2024, and 2025 respectively, with a net profit forecast of 108.62 million, 158.24 million, and 228.61 million for the same years [61][50]. - The projected earnings per share (EPS) for 2023, 2024, and 2025 are 1.30, 1.89, and 2.73 respectively, indicating strong growth potential [61][50].