Times Electric(HK:03898) KAIYUAN SECURITIES·2024-03-31 16:00Investment Rating - The investment rating for the company is "Buy" (maintained) [2][4] Core Insights - The company is expected to benefit from the renewal of rail transit equipment and proactive planning in the power grid sector [2][4] - The forecast for net profit attributable to the parent company has been raised from 3.3 billion RMB to 3.6 billion RMB for 2024, with projected net profits of 4 billion RMB for 2025 and 4.5 billion RMB for 2026, reflecting year-on-year growth rates of 15%, 11%, and 13% respectively [4][5] - The current stock price of 24.8 HKD corresponds to price-to-earnings ratios of 8.9, 8.0, and 7.1 for 2024, 2025, and 2026 respectively [4] Revenue and Profitability - In 2023, the traditional rail transit equipment business generated revenue of 12.9 billion RMB, a year-on-year increase of 2% [5] - The revenue from new rail construction was approximately 11.1 billion RMB, while maintenance revenue was around 1.8 billion RMB [5] - The company anticipates that maintenance revenue will continue to grow rapidly due to the trend of replacing old equipment, with the maintenance market for high-speed trains expected to grow over 50% in the next two to three years [5] Emerging Equipment Business - The emerging equipment business achieved revenue of 8.7 billion RMB in 2023, a year-on-year increase of 70%, with a gross margin of 28.2% [6] - The demand for this business remains strong, and it is expected to continue high growth from 2024 to 2026 [6] - The power semiconductor segment saw a revenue increase of 69% in 2023, with expectations for continued high growth driven by new production capacity and improved yield rates [6] Financial Metrics - The company's projected operating revenue for 2024 is 25.6 billion RMB, with a year-on-year growth rate of 17.4% [7] - Net profit for 2024 is projected at 3.6 billion RMB, reflecting a year-on-year growth of 15.2% [7] - The gross margin is expected to be 34.1% in 2024, with a net margin of 14.0% [7]