Warom Incorporated(603855) 光大证券·2024-08-31 13:11Investment Rating - The report maintains a "Buy" rating for Huarong Co Ltd (603855 SH) due to its position as a global leader in explosion-proof electrical appliances and its high dividend yield in the manufacturing sector [1] Core Views - Huarong Co Ltd's H1 2024 performance slightly missed expectations due to weaker domestic demand, but overseas market expansion showed strong growth [1] - The company's explosion-proof product business revenue declined by 3 70% YoY to 1 132 billion yuan domestically, while overseas revenue surged 29 08% to 417 million yuan [1] - New energy EPC business revenue grew significantly by 6481% YoY to 127 million yuan, with full-year revenue expected to reach 800 million yuan [1] - The company's overall gross margin decreased from 57 39% to 52 59% due to the increased proportion of lower-margin new energy EPC business [1] Business Performance - The company achieved total revenue of 1 401 billion yuan in H1 2024, a 6 39% YoY increase, with net profit attributable to shareholders reaching 200 million yuan, up 2 57% YoY [2] - The explosion-proof electrical appliance business is transitioning from hardware to integrated hardware-software systems, with the company's self-developed "SCS Safety Intelligent Control System" gaining traction in the market [2] - The company's safety intelligent products are in high demand in the hazardous chemical park market, with significant order growth [2] Financial Projections - The report revised down the company's net profit forecasts for 2024-2026 to 510 million, 619 million, and 734 million yuan, respectively, representing reductions of 6%, 12%, and 6% [1] - EPS projections for 2024-2026 are 1 51, 1 83, and 2 17 yuan, respectively [1] - ROE (attributable to parent company) is expected to increase from 24 16% in 2024 to 27 60% in 2026 [3] Market Data - The company's current market capitalization stands at 5 816 billion yuan, with a total share capital of 338 million shares [6] - The stock's 52-week range is between 14 38 yuan and 23 74 yuan [6] - The 3-month turnover rate is 22 66% [6] Valuation Metrics - The company's P/E ratio is projected to decrease from 11 in 2024 to 8 in 2026 [3] - The P/B ratio is expected to decline from 2 8 in 2024 to 2 2 in 2026 [3] - The dividend yield is forecasted to increase from 6 6% in 2024 to 7 6% in 2026 [3] Overseas Expansion - The company is rapidly expanding its overseas markets, particularly in the Middle East, Asia-Pacific, and Africa, where oil and gas project investments are concentrated [1] - The company has established overseas operation centers and joint ventures, with its Saudi subsidiary completing registration in H1 2024 [1] - International market localization is expected to open up incremental growth space for the company [1]