SUPCON Technology (688777) -·2025-01-17 02:53Investment Rating - The report maintains a "Buy" rating for the company with a target price of Rmb 59.00, reflecting a 23.2% potential upside from the current price of Rmb 47.89 [4][5][24]. Core Insights - The company expects a revenue growth of 10-15% in 2024, driven by government stimulus policies and a recovery in demand, particularly in the chemical and petrochemical sectors [1][2]. - The management anticipates a significant increase in overseas orders, projecting a growth of approximately 50% [1]. - The company has implemented cost control measures, which are expected to enhance operating profit margins despite a downward adjustment in EPS forecasts for 2024-2026 [3]. Summary by Sections Revenue and Growth Projections - The company forecasts stable growth in its chemical and petrochemical business, supported by government investments in Xinjiang's coal chemical industry [2]. - The software business is transitioning to a SaaS model, aiming to penetrate the small and medium enterprise market more effectively [2]. Profitability Adjustments - EPS forecasts for 2024-2026 have been revised down by 5-11% due to lower revenue expectations, reflecting a 6-15% decrease in revenue projections [3]. - Despite the downward adjustment in revenue, the company expects a compound annual growth rate (CAGR) of approximately 15% for EPS from 2024 to 2026 [3]. Valuation and Market Position - The target price is based on a 32x PE ratio for 2025E, which is an increase from the previously implied 25x, indicating a positive outlook for the software industry [4]. - The company is recognized as the largest supplier of distributed control systems (DCS) in China, with a diversified client base across various process industries [10].