\u3000\u3 China Vanke Co.Ltd(000002) 270 Huaming Power Equipment Co.Ltd(002270) )
Tap changer is one of the best links in the field of power equipment, and the company has a solid leading position in China. Tap changer is an indispensable and important part of transformer. It belongs to the “small and fine” link in the power equipment industry. The industry has high barriers to entry and a stable market pattern. The company has been deeply engaged in the tap changer industry for decades and has deep barriers to competition. After the acquisition of Changzheng electric in 2019, the market share of on load tap changer for transformers above 35kV in China exceeds 90%, ranking second in the world.
The construction of new power system drives the growth center of tap changer demand to move up, and the company benefits fully as an industry leader. 1) Power generation side: the transformation of new energy has accelerated, China’s wind power and photovoltaic installation space has been fully opened, and large new energy stations need to be equipped with step-up transformers. We calculate that the demand for new energy grid connection has become an important structural increment in China’s tap changer Market; 2) Power grid side: during the 14th Five Year Plan period, China’s power grid investment is expected to rise steadily, and UHV construction and transformer energy-saving transformation are expected to become important factors driving the demand for tap changers; 3) Power consumption side: under the background of dual carbon, the substitution of terminal electric energy is accelerated, and the electrification transformation on the user side is expected to drive the demand of relevant transformers and tap changers.
The company has focused on the three directions of UHV, overseas market and maintenance service, and its performance has accelerated upward. 1) UHV: at present, the tap changer in the UHV field above 500kV is mainly dominated by foreign manufacturers such as German MR and abb, and the “neck sticking” phenomenon still exists. The company has made a certain breakthrough in the UHV field and is expected to realize import substitution in the future; 2) Overseas market: the company’s products have stronger cost performance advantages than foreign manufacturers. With the improvement of overseas layout, the company’s overseas market share will have greater room for improvement in the future; 3) Maintenance service: the maintenance of tap changer is just needed by the industry. At present, the company operates more than 160000 tap changers in the network. The maintenance service business has been in rapid volume since 2020, and the service revenue has reached 90 million yuan in 2021. It is expected to continue to contribute to the performance increment in the future. In the first quarter of 2022, the company realized a revenue of 321 million yuan, a year-on-year increase of + 2.7%, and the net profit attributable to the parent company was 66 million yuan, a year-on-year increase of + 54%. The growth logic continued to be realized.
Investment suggestion: the demand of the tap changer industry is upward, and the leading position of the company is stable. It is expected that the company will realize revenue of RMB 1.735/2.029/2.314 billion and net profit attributable to the parent company of RMB 326/4.08/473 million respectively from 2022 to 2024, and the performance will improve steadily after deducting non recurring profits and losses (the company’s sale of Bassi power project in 2021 will generate large income from changes in fair value). Given the “Buy-A” investment rating, the six-month target price is 7.26 yuan, corresponding to 20 times the P / E ratio in 2022.
Risk warning: power investment is less than expected, and overseas market expansion is less than expected
