Warom Incorporated(603855) 中邮证券·2025-01-10 11:03Investment Rating - The report maintains a "Buy" rating for the company [8] Core Views - Huaron Co., Ltd. is a leading enterprise in the explosion-proof electrical equipment sector, with a strong market position and promising growth prospects driven by both domestic and international demand [3][4] - The company is expected to benefit from a high dividend yield, with projected earnings of 5.01 billion yuan in 2024 and 5.7 billion yuan in 2025, leading to dividend ratios of 75% and corresponding yields of 5.85% and 6.65% [3][8] - The company is transitioning from a single product manufacturer to a comprehensive service provider in smart safety systems, with significant growth in both domestic and foreign orders [7][8] Summary by Sections 1. Company Overview - Huaron Co., Ltd. has over 30 years of experience in the explosion-proof field, offering a wide range of products and extensive certifications, including over 400 international certificates and 2000 domestic certifications [4][20] - The company has maintained steady revenue and profit growth, with total revenue reaching 31.97 billion yuan in 2023, reflecting a year-on-year growth of 5.06% [24][25] 2. Market Dynamics - The global explosion-proof electrical equipment market is projected to grow from over 5 billion USD in 2019 to 8 billion USD by 2025, with a compound annual growth rate of 8% [5][45] - The domestic market for explosion-proof electrical equipment is expected to increase from 85 billion yuan in 2021 to 124 billion yuan by 2025, driven by demand from various sectors including food, medicine, and new materials [45][46] 3. Competitive Landscape - The company holds the largest market share in China and ranks third globally in the explosion-proof electrical equipment market, with significant opportunities for international expansion [4][6] - The competitive landscape is characterized by a concentrated market share among leading domestic manufacturers, providing a favorable environment for Huaron's overseas growth [6][45] 4. Financial Projections and Valuation - Revenue projections for 2024-2026 are 36.10 billion yuan, 39.08 billion yuan, and 42.28 billion yuan, with corresponding net profits of 5.01 billion yuan, 5.70 billion yuan, and 6.44 billion yuan [8][11] - The company's price-to-earnings ratios for 2024-2026 are estimated at 12.82, 11.27, and 9.98, indicating a favorable valuation compared to peers [8][11]