xinje(603416) 天风证券·2024-11-08 12:45Investment Rating - The report gives a "Buy" rating for the company with a target price of 46.24 CNY, based on a 26X PE valuation for 2024 [3][47]. Core Insights - The company, Xinjie Electric, is a leading domestic player in the small PLC market, with a market share of 7% in China, ranking fourth overall and second among domestic manufacturers [1][19]. - The company is expected to benefit from the growing industrial automation market, projected to expand from 205.86 billion USD in 2022 to 395.09 billion USD by 2029 [2][29]. - The company's revenue is forecasted to grow steadily, with total revenues expected to reach 17.3 billion CNY in 2024, 20.0 billion CNY in 2025, and 23.2 billion CNY in 2026, reflecting growth rates of 15%, 16%, and 16% respectively [3][42]. Summary by Sections 1. Industrial Control Business Growth - Xinjie Electric specializes in industrial automation products, maintaining a strong position in the small PLC market with significant advantages [1][12]. - The company's main products include PLCs, drive systems, HMIs, and intelligent equipment, with drive systems accounting for nearly half of its revenue in 2023 [1][16]. - The company has a robust R&D focus, with R&D expenses constituting 9.76% of revenue in 2023 and a workforce comprising 31.62% of R&D personnel [12][13]. 2. Fundraising and Market Confidence - In May 2024, the company plans to raise up to 500 million CNY for technology center construction, marketing network expansion, and working capital [2][23]. - The actual controller, Mr. Li Xin, has fully subscribed to this fundraising, demonstrating strong confidence in the company's future [2][25]. 3. Market Potential in Medium and Large PLCs - The domestic PLC market has significant room for growth, particularly in medium and large PLCs, where foreign brands currently dominate [3][30]. - The company aims to leverage its technological advantages and expand its product line into medium PLCs and related automation products [20][42]. 4. Profit Forecast and Valuation - The company is expected to achieve a compound annual growth rate (CAGR) of 15% over the next three years, with net profits projected to reach 2.5 billion CNY in 2024, 2.9 billion CNY in 2025, and 3.4 billion CNY in 2026 [3][42]. - The report anticipates stable gross margins around 37% for the next three years, with the PLC segment maintaining a high gross margin of over 50% [3][42][46].