Shanghai Liangxin Electrical (002706) 民生证券·2024-03-29 16:00Investment Rating - The report maintains a "Recommend" rating for the company [1][3] Core Views - The company's 2023 performance met expectations, with revenue reaching RMB 4,585 million, a YoY increase of 10.30%, and net profit attributable to shareholders reaching RMB 511 million, a YoY increase of 21.15% [1] - The company's gross margin improved to 32.45%, up 1.85 percentage points YoY, and the net margin increased to 11.14%, up 1 percentage point YoY [1] - The company has made breakthroughs in key markets such as construction, power, new energy, industrial control, data centers, and automotive, and is steadily expanding into emerging markets like smart homes, new energy vehicles, and power IoT [1] - The company's R&D investment reached RMB 283 million in 2023, a YoY increase of 4.88%, and it has accumulated 1,815 authorized patents, showcasing strong technological innovation capabilities [1] - The Haixi factory is fully operational, leveraging advanced manufacturing and information technologies, and is expected to handle the company's order production and delivery next year [1] Financial Performance Summary - Revenue for 2023 was RMB 4,585 million, with a projected growth of 31.8% to RMB 6,043 million in 2024, and further growth to RMB 9,537 million by 2026 [1][2] - Net profit attributable to shareholders is expected to grow from RMB 511 million in 2023 to RMB 899 million by 2026, with a CAGR of 20.7% [1][2] - The company's EPS is projected to increase from RMB 0.45 in 2023 to RMB 0.80 by 2026 [2] - The PE ratio is expected to decrease from 17x in 2023 to 10x by 2026, indicating potential undervaluation [2] Market and Industry Positioning - The company is a leading player in the high-end market of the low-voltage electrical industry, with a clear market positioning and strong R&D capabilities [1] - The company is focusing on digital transformation, introducing AI-powered customer service and exploring new business models like LDC to enhance efficiency across R&D, supply chain, and quality control [1] - The company's strategic focus on smart electrical solutions and its expansion into emerging markets like new energy vehicles and power IoT position it well for future growth [1] Valuation and Projections - The company's 2024-2026 revenue is projected to grow at a CAGR of 25.8%, reaching RMB 9,537 million by 2026 [1][2] - Net profit attributable to shareholders is expected to grow at a CAGR of 20.7%, reaching RMB 899 million by 2026 [1][2] - The company's PE ratio is expected to decline from 17x in 2023 to 10x by 2026, suggesting potential upside [2] - The PB ratio is projected to decrease from 2.1x in 2023 to 1.6x by 2026, indicating improving valuation metrics [2]