China XD(601179) 东吴证券·2024-06-14 02:30Investment Rating - Buy (首次) [1] Core Views - The company is a leading player in the power transmission and transformation equipment industry, with a comprehensive product portfolio covering transformers, switchgear, and power electronics. It has entered a new phase of development with improved profitability and growth prospects driven by domestic and international market expansion [1][2] - The company is expected to benefit from the high-growth cycle of ultra-high voltage (UHV) projects in China and the revival of the Belt and Road Initiative, which will drive overseas business recovery. The company's UHV orders surged by 1001% YoY in 2023, and its market share in key UHV equipment remains strong [2] - State-owned enterprise (SOE) reforms and management improvements have significantly enhanced the company's operational efficiency. The company has reduced its workforce by 3,310 employees from 2021 to 2023, while increasing per capita profit by 56% in 2023 [2] Profit Forecast and Valuation - The company's revenue is expected to grow from 21.05 billion yuan in 2023 to 32.63 billion yuan in 2026, with a CAGR of 15-20%. Net profit attributable to shareholders is projected to grow from 885 million yuan in 2023 to 2.51 billion yuan in 2026, with a CAGR of 35-40% [1] - The company's EPS is forecasted to increase from 0.17 yuan per share in 2023 to 0.49 yuan per share in 2026, with a P/E ratio declining from 41.98x in 2023 to 14.80x in 2026 [1] Market and Industry Analysis - The global power grid construction is entering a new cycle, with significant opportunities in both domestic and international markets. The company's overseas revenue reached 2.7 billion yuan in 2023, with new international orders exceeding 4 billion yuan [2] - The company's UHV business is a key growth driver, with a 1001% YoY increase in UHV project orders in 2023. The company's market share in key UHV equipment such as converter valves and transformers remains strong, with 20% and 25% market shares, respectively [2] - The company's overseas business is expected to become a second growth curve, supported by its early market entry, strategic partnerships with GE, and production bases in Egypt and Indonesia [2] Operational Improvements and Reforms - The company has undergone significant SOE reforms, including workforce optimization and market-oriented incentives. From 2021 to 2023, the company reduced its workforce by 3,310 employees, while increasing per capita profit by 56% in 2023 [2] - The company has focused on its core business by divesting low-margin new energy EPC projects, which is expected to further improve profitability. In 2023, the company transferred its new energy EPC subsidiaries, resulting in a gain of 715 million yuan [2] Product and Market Competitiveness - The company's product portfolio covers a wide range of power transmission and transformation equipment, including transformers, switchgear, and power electronics. Its market share in key UHV equipment such as converter valves and transformers remains strong, with 20% and 25% market shares, respectively [2] - The company has strengthened its market competitiveness through SOE reforms and strategic partnerships. Its UHV project orders surged by 1001% YoY in 2023, and its market share in key UHV equipment remains strong [2] Overseas Expansion - The company has a strong presence in overseas markets, with operations in over 80 countries and regions. Its overseas revenue reached 2.7 billion yuan in 2023, with new international orders exceeding 4 billion yuan [2] - The company has established production bases in Egypt and Indonesia, which provide a strong foundation for further international expansion. Its partnership with GE has also enhanced its technological capabilities and market access [2]