Hsino Tower (601096) 东吴证券·2024-12-31 07:51Investment Rating - The report initiates coverage with an "Overweight" rating for the company [1] Core Views - The company is entering a new phase of development after being integrated into CEE, with a strong position in the power transmission tower market [85] - The company is expected to benefit from the new construction cycle of ultra-high voltage (UHV) projects, which will significantly increase the demand for transmission towers [2] - The company is expanding its overseas market presence and exploring new business areas, which are expected to become important growth drivers [3] Industry Overview - The UHV sector is entering a new construction cycle, with significant investment expected from 2021 to 2025, reaching 4500 billion yuan, a 111.27% increase compared to the previous cycle [39] - The UHV market is expected to grow further from 2026 to 2030, with investment projected to reach 5900 billion yuan, a 31% increase from the 2021-2025 period [39] - The UHV transmission tower market is estimated to have an annual market space of over 20 billion yuan, with the overall power transmission tower market in China reaching 59.5 billion yuan in 2022 [2][51] Company Overview - The company is a leading player in the power transmission tower industry, with a strong market position and extensive experience in both domestic and international markets [21] - The company has a diversified product portfolio, including angle steel towers, steel pipe towers, steel pipe poles, and substation structures, with angle steel towers accounting for the largest share of revenue [118] - The company has a robust R&D focus, with R&D expenses increasing from 0.73% in 2021 to 1.56% in 2024Q1-3, driven by innovations in tower structure optimization, material innovation, and intelligent technology [37] Financial Performance - The company's revenue has shown steady growth, with a CAGR of 15% expected from 2023 to 2026 [85] - Net profit attributable to shareholders is expected to grow significantly, with forecasts of 231 million yuan in 2024, 279 million yuan in 2025, and 385 million yuan in 2026, representing year-on-year growth of 86%, 21%, and 38%, respectively [87] - The company's gross margin has been under pressure due to rising raw material costs, but it is expected to recover, with gross margins projected to be 9.53%, 10.14%, and 10.92% in 2024, 2025, and 2026, respectively [161] Market Expansion and New Business Areas - The company is actively expanding its overseas market, with overseas revenue growing at a CAGR of 36% from 2019 to 2023, accounting for 4% of total revenue in 2023 [3][151] - The company is exploring new business areas such as building steel structures, communication towers, and new energy, which are expected to become the company's second growth curve [3][153] Competitive Advantages - The company has a leading market share in the domestic power transmission tower market, with a 20% share in the State Grid market and a 29% share in the UHV market [86] - The company has strong technical capabilities, with 24 national and industry standards led or participated in by the company, and a wide range of production capacity across multiple regions in China [56] - The company has implemented cost control measures, such as "steel billet price locking," to mitigate the impact of raw material price fluctuations and improve profitability [155]