SUPCON Technology (SH:688777) Tai Ping Yang·2024-03-12 16:00Investment Rating - The report maintains a "Buy" rating for the company [3][4]. Core Insights - The company is a leading provider of intelligent manufacturing solutions in the domestic process industry, with a strong focus on automation control systems and industrial software [3][10]. - The company has achieved a compound annual growth rate (CAGR) of 32.74% in revenue from 2018 to 2022, with a projected revenue of 86.19 billion yuan in 2023, representing a year-on-year growth of 30.12% [3][13]. - The company has a significant market share in various segments, including 36.7% in Distributed Control Systems (DCS) and 29.0% in Safety Instrumented Systems (SIS) [3][30]. Summary by Sections 1. Company Overview - The company has been deeply engaged in the process industry for over 20 years, evolving from an automation product supplier to a comprehensive intelligent manufacturing solution provider [3][10]. - It has served over 30,000 clients across various industries, including chemicals, petrochemicals, oil and gas, and pharmaceuticals [10]. 2. Market Position and Growth - The company holds the top position in the domestic DCS market, with a market share of 36.7%, and has seen continuous growth in its market presence [30]. - The SIS market is also growing steadily, with the company achieving a 29.0% market share, marking its first position in this segment [30][31]. 3. Financial Performance - The company reported a revenue of 86.19 billion yuan in 2023, with a net profit of 9.45 billion yuan, reflecting a year-on-year increase of 30.12% and 38.43%, respectively [3][13]. - The company has maintained a stable net profit margin between 12% and 13% since 2018, despite fluctuations in gross margin due to strategic shifts towards larger projects [16]. 4. Research and Development - The company emphasizes R&D, with a budget of 6.92 billion yuan in 2022, accounting for 10.45% of its revenue, and has increased its R&D personnel to 2,282, representing 34.55% of its workforce [19][20]. - The company employs an Integrated Product Development (IPD) model to enhance R&D efficiency and align product development with market needs [19][20]. 5. Strategic Expansion - The company is actively expanding into non-traditional sectors such as lithium batteries and pharmaceuticals, achieving remarkable growth rates of 484.27% and 154.71% in these areas, respectively [3][18]. - It is also pursuing international markets, securing contracts with major global clients like Saudi Aramco and Shell, which has contributed to a 109.6% increase in overseas contracts in the first half of 2023 [3][18].