Times Electric(HK:03898) KAIYUAN SECURITIES·2024-04-28 08:02Investment Rating - The investment rating for the company is "Buy" (maintained) [2] Core Views - The company's main business is expected to benefit from equipment update policies, and its semiconductor business is expanding its market share. The forecast for net profit attributable to shareholders for 2024-2026 is 3.6 billion, 4.0 billion, and 4.5 billion RMB, corresponding to year-on-year growth rates of 15%, 11%, and 13% respectively. The current stock price of 30.15 HKD corresponds to P/E ratios of 11.0, 10.0, and 8.8 for 2024-2026 [2] - In Q1 2024, the company's rail transit revenue grew by 44% year-on-year, primarily due to the delivery of train orders at the end of 2023. The traditional rail transit equipment business achieved revenue of 2.1 billion RMB, with a gross margin improvement driven by new train manufacturing and maintenance business growth [2] - The new equipment business's revenue in Q1 2024 was 1.8 billion RMB, with a year-on-year growth of 13%. The power semiconductor segment saw a 22% increase in revenue, while sensor revenue declined by 49% due to decreased demand in the photovoltaic sector [3] Summary by Sections Rail Transit Business - The rail transit business is expected to benefit from equipment update policies, with Q1 2024 revenue showing a significant increase of 44% year-on-year, mainly from the delivery of 55 new trains [2] - Maintenance revenue continued to grow rapidly, with a 50% increase in 2023 and a 30% increase in Q1 2024, driven by the trend of replacing old equipment [2] - The company conservatively guides for a slight increase in rail transit revenue for 2024 due to the unclear implementation of the old-for-new policy and the lack of new locomotive tenders [2] New Equipment Business - The new equipment business's revenue in Q1 2024 was 1.8 billion RMB, with a year-on-year growth of 13%, although the growth rate was below expectations [3] - The power semiconductor segment's revenue grew by 22%, with the IGBT production line expected to contribute to revenue in 2024 [3] - The sensor segment experienced a significant decline in revenue, primarily due to reduced demand in the photovoltaic sector, but recovery is anticipated in Q2 2024 [3] Financial Metrics - The company's projected revenue for 2024 is 25.602 billion RMB, with a year-on-year growth of 17.4%. Net profit is expected to reach 3.579 billion RMB, reflecting a 15.2% year-on-year increase [4] - The gross margin is projected to be 34.1% in 2024, with a net margin of 14.0% [4] - The company's P/E ratio is expected to decrease from 11.0 in 2024 to 8.8 in 2026, indicating a potentially attractive valuation [4]