Henan Thinker Automatic Equipment (SH:603508) Haitong Securities·2024-03-09 16:00Investment Rating - The report assigns an "Outperform" rating for the company [14][18]. Core Views - The company is a leader in the domestic LKJ train control systems, focusing on the independent research, upgrading, and industrialization of train operation control systems, which has led to a strong competitive advantage and sustainable development [4]. - The company is expected to benefit from a new round of large-scale equipment updates and policy opportunities, which will drive growth in its core business areas [6][25]. - The company has shown steady revenue growth, with a projected increase in net profit for 2023 of 10% to 30% compared to the previous year [16][18]. Financial Summary - Revenue is projected to grow from 1,067 million yuan in 2022 to 1,996 million yuan by 2025, reflecting a compound annual growth rate (CAGR) of approximately 33.5% [5][21]. - Net profit is expected to increase from 346 million yuan in 2022 to 677 million yuan by 2025, with a CAGR of about 35.3% [5][21]. - The company’s EPS is forecasted to rise from 0.91 yuan in 2022 to 1.78 yuan by 2025 [5][21]. Business Segmentation - The train operation control system segment is expected to see revenue growth from 582.44 million yuan in 2022 to 1,272.05 million yuan by 2025, with a projected CAGR of 40% [20]. - The railway safety protection system segment is anticipated to grow from 202.45 million yuan in 2022 to 348.47 million yuan by 2025, with a CAGR of 35% [20]. - The high-speed railway train operation monitoring system segment is expected to recover, with revenue projected to increase from 1067.17 million yuan in 2022 to 1995.54 million yuan by 2025 [20]. Market Outlook - The company is well-positioned to capture growth opportunities as the demand for train control systems increases due to the planned phase-out of old diesel locomotives by 2027 [25]. - The government’s focus on reducing logistics costs and promoting the use of new energy equipment in railways is expected to further enhance the company’s growth prospects [6][25].