Changgao NEET(002452) 国信证券·2024-11-20 06:40Investment Rating - The report assigns an "Outperform" rating to Changgao Electric (002452 SZ) [1][6] Core Views - Changgao Electric is a leading manufacturer of switchgear equipment, benefiting from investments in both main and distribution grids [1] - The company is expected to benefit from the high growth in main grid investments during the "15th Five-Year Plan" period, driven by energy transition and large-scale base construction [1] - Distribution grid investments are expected to enter a new cycle, with switches and transformers being key areas for upgrades [2] - The company has a complete product portfolio for distribution grids and is expanding production capacity to meet future demand [2] Company Overview - Changgao Electric is a veteran in the isolation switch industry, with products covering main and distribution grids [1] - The company has three major production bases and plans to issue convertible bonds to further meet production needs [1] - In 2024, the company implemented an employee stock ownership plan [1] Main Grid Equipment Business - The "14th Five-Year Plan" period has seen rapid growth in power grid investments, with ultra-high voltage (UHV) and main grids being key focus areas [65] - National Grid's investment in 2024 is expected to exceed 600 billion yuan for the first time, with UHV and digitalization being major directions [65] - Gas-insulated switchgear (GIS) and isolation switches are core equipment for main grid construction, with 2023 centralized bidding scales of approximately 20 billion yuan and 1 6 billion yuan respectively [2] - The company has a 4% market share in GIS and 15% in isolation switches in National Grid's centralized bidding [2] - The company has achieved breakthroughs in 550kV GIS and is developing 363/750kV GIS products [2] Distribution Grid Equipment Business - Distribution grid investments are expected to enter a new cycle, driven by the clean, green, and intelligent transformation of power systems [2] - The company has a complete product portfolio for distribution grids, including oil-immersed/dry-type transformers, integrated pole-mounted circuit breakers, and environmentally friendly gas-insulated ring main units [2] - In 2024, the company's "Changgao Green Smart Distribution Industrial Park" project was established in Hengyang National High-Tech Zone [2] Financial Performance and Valuation - The company is expected to achieve net profits of 257 million yuan, 350 million yuan, and 436 million yuan in 2024-2026, with year-on-year growth rates of 49%, 36%, and 24% respectively [3] - Earnings per share (EPS) are projected to be 0 41 yuan, 0 56 yuan, and 0 70 yuan for 2024-2026, with corresponding P/E ratios of 18x, 13x, and 11x [3] - The report estimates a reasonable valuation range of 8 96-9 52 yuan, representing a 21%-29% premium over the current stock price [3] SWOT Analysis - Strengths: Strong technical expertise, stable equity structure, and coverage of both main and distribution grid demands [61] - Weaknesses: Limited overseas market expansion and drag from EPC business [61] - Opportunities: Rapid development of new energy driving UHV/main grid construction, distribution grid market reforms, and large-scale equipment renewal policies [61] - Threats: Intensified industry competition and potential underperformance in GIS and complete equipment market expansion [61]