Huaming Power Equipment Co.Ltd(002270) (002270)
Key investment points:
Huaming Power Equipment Co.Ltd(002270) mainly engaged in the R & D, production, sales and equipment maintenance of transformer tap changer. The company was founded in 1995 and listed in backdoor in 2015. At present, it has formed three business segments: tap changer, CNC equipment and new energy power station contracting. In the first half of 2021, the manufacturing and maintenance revenue of tap changer equipment was 547 million yuan, accounting for 80.0%, and the gross profit contribution was nearly 90%, which was the core source of the company's profit.
Financial analysis: since 2018, driven by the rapid growth of tap changer, the company's revenue and profit have gradually returned to a stable growth state, and the cash flow of operating activities has improved significantly; The company's gross profit margin and period expense ratio have also been greatly improved, but credit impairment and asset impairment have dragged down the company's net profit margin; From the perspective of accounts receivable structure, there is still impairment pressure on the contracting business of new energy power station in the short term.
Transformer tap changer: tap changer is one of the important components of transformer. It is mainly used for long-distance transmission of power across provincial power grid and voltage regulation in power supply area. The global market share of the company is 35%, and the market share in China is more than 90%. Conversion costs, technical barriers and cost advantages create a deep moat for the company.
Growth space: 1) calculation of tap changer scale: in 2025, the global market scale will be about 4.5 billion yuan, and the CAGR from 2021 to 2025 will be 10%; 2) Overseas business: the CAGR of overseas power grid investment will exceed 5% in the next 10 years. The company has been working overseas for 20 years, and the overseas income is expected to grow rapidly; 3) Equipment maintenance: there are more than 160000 switches operating in the network. With the gradual aging of equipment, the maintenance business has great potential; 4) UHV: the first domestic UHV tap changer of the company has been delivered in the first half of 21, breaking the monopoly of foreign capital in this field. According to the prediction of China business intelligence network, the CAGR of China's UHV investment from 2022 to 2025 is 11.0%. The domestic substitution of UHV is another catalyst for the growth of the company.
Profit forecast: we estimate that the company's revenue from 2021 to 2023 will be 1.52 billion yuan, 1.66 billion yuan and 1.83 billion yuan respectively, with a year-on-year growth rate of 10.7%, 9.8% and 10.1% respectively; The attributable net profits were 441 million yuan, 287 million yuan and 342 million yuan respectively, with a year-on-year growth rate of 52.6%, - 35.0% and 19.3%; The corresponding PE from 2021 to 2023 are 17.3 times, 26.6 times and 22.3 times respectively. Considering the leading position of Huaming Power Equipment Co.Ltd(002270) in the field of transformer tap changer, the coverage is given a "prudent recommendation" rating for the first time.
Risk tip: overseas business expansion is less than expected; The progress of maintenance business is less than expected; The progress of UHV equipment is less than expected; The impairment of accounts receivable exceeded expectations.
