Deeply cultivating power electronics and achieving rapid growth in performance. The company started with power quality products and achieved a transformation from a single business line to four major business lines based on power electronic transformation and control underlying technology. At present, the company mainly focuses on four business segments: industrial supporting power supply (power quality+industrial power supply), new energy vehicle charging and swapping services, new energy energy energy conversion equipment, and battery formation testing equipment. The company's revenue and net profit attributable to shareholders (CAGR) from 2019 to 2023 were 43%/60%, respectively, achieving rapid growth. In terms of structure, the company previously focused on the power quality business, and in recent years, it has benefited from the increasing demand in the new energy industry. The revenue share of charging piles and energy storage business has significantly increased, reaching 34%/32% in 2023, becoming the company's top two main businesses.

The energy storage outlet has arrived and the growth momentum is strong. The energy storage market has broad prospects. In 2012, the company made a forward-looking layout in the energy storage PCS sector, with more than 10 years of experience and a high industry ranking, possessing competitive advantages: 1) First mover advantage: complete overseas qualification certification, 30-1000kW full power range energy storage inverter products have been certified by third-party certification agencies, and domestic rich project experience helps to obtain orders; 2) Strong product strength: The company has a clear positioning, focusing on large-scale storage and industrial and commercial scenarios, with targeted solutions for each scenario. In 23 years, the company's energy storage business achieved revenue of 910 million yuan, a year-on-year increase of 255%, achieving high-speed growth.

The demand for charging is strong, and the market is slowly rising. The company is an upstream equipment provider of charging piles with core technological strength, with products focused on mid to high end and industry-leading profitability. In the second half of 2021, we will explore new markets such as specialized vehicles and heavy-duty trucks, while increasing module sales as a profit supplement, enhancing our profitability. The company's initial success in expanding into the European market has made it one of the first charging pile manufacturers to enter the BP China supplier list. In 23 years, the company's charging pile business achieved a revenue of 850 million yuan, a year-on-year increase of 99.58%, and is expected to continue to increase in volume in the future.

Based on power quality, performance has steadily improved. The market size of power quality equipment is steadily increasing, and it is expected to reach 168 billion yuan by 2024, corresponding to a CAGR of 8% for the period of 18-24. Starting from 2020, the tail companies in the industry have gradually cleared out, and the competitive landscape has been gradually optimized. The company ranks first in the power quality of low-voltage users and maintains a leading profitability in the industry. The CAGR of this business from 20 to 23 years is 25%, higher than the industry growth rate, and is expected to continue to contribute to performance.

Battery formation detection: binding downstream customers, stable and high-volume business. The company's products have a wide range of applications, basically covering all models of production lines and laboratories, and are bound to numerous large and medium-sized customers in the industry. In 23 years, overseas battery factories have maintained an expansion trend in production capacity. The company's battery testing and capacity splitting equipment achieved overseas sales revenue in 23 years, and will continue to expand overseas sales channels and opportunities in 24 years, maintaining a trend of growth against the downward trend in the industry.

Investment suggestion: The company has a forward-looking strategic layout, outstanding product competitiveness, and four major business lines advancing together. The energy storage and charging pile business has a minimum volume, and the basic foundation of electricity quality is stable. The battery formation testing is linked to downstream customers, and the overall performance is highly certain. We expect the company to achieve a revenue of 3.623/4894/6516 billion yuan from 2024 to 2026, with growth rates of 36.7%/35.1%/33.1% respectively; The net profit attributable to shareholders was RMB 553/734/984 million, with growth rates of 37.3%, 32.6%, and 34.1%, respectively. On April 12th, the stock price corresponds to a PE multiple of 16x/12x/9x. First coverage, give a "recommendation" rating.

Risk warning: There is a risk that the progress of energy storage policy implementation is not as expected; Risk of upstream raw material price increase; Supply chain shortage risk; Market competition intensifies risks.