Huaming Equipment: Wells Fargo Fund investigated our company on November 30

On December 2, 2021, Huaming Equipment (002270) announced that wells fargo fund surveyed our company on November 30, 2021.

The main contents of this survey are:

Q: The impact of the distribution network?

A: At present, it is impossible to accurately judge how much impact it will have, if the proportion of new energy generation and new energy vehicles is increased in the future, the distribution network may generate new demand, but at present, we have not seen corresponding changes in the sales side.

Q: What is the amount of product used in the UHV market?

A: According to the current situation, the UHV market has less demand for the company's products, less UHV lines, and the number of each line is limited, the direct income or profit formed by the UHV market will not have a significant impact, and the significance of the UHV market breakthrough is mainly conducive to the development of the company's overseas business and other market breakthroughs and its brand effect.

Q: What is the need for distributed generation?

A: Distributed generation according to the current situation, usually will not use the company's products, the future if you need to centralize access to the power grid, may have new demand with the increase in installed capacity, which also needs to see the specific planning and development of energy storage technology, but how to achieve and conduct ultimately depends on the development of technology and the planning of the power grid.

Q: The price of raw materials has risen, has the price of the company's products increased?

A: The company's products have not raised prices, the real profit of the tap changer is in the added value of technology, and the material cost has a relatively small impact on the gross profit of the company's products. Through technological innovation and research and development of new products, the company further improves gross profit margin and enhances its competitive advantage.

Q: What will be the next 500kV growth rate?

A: The domestic market share of more than 500kV is relatively low, there are reasons for user habits, there are also reasons why the company's marketing is not in place, we believe that the company's breakthrough and success in the UHV market in the future will bring new demand to the company above 500kV.

Q: On-load and unloaded?

A: Mainly in different fields and occasions, in the case of the voltage switching must be charged to complete the need to use on-load tap change, other cases can use no load tap change.

Q: Offshore wind power, the impact of flexible DC switches?

A: The company is also paying attention to the changes in this market, the company's products in this market coverage is relatively low, customers use the company's products are relatively small, most of them use foreign products, the future company will be combined with the development of this market to carry out marketing.

Q: What is the market space for overhaul services?

A: Preliminary statistics currently in stock of operation of tap changer products about 160,000 units, will maintain about 10,000 units of new additions every year, in addition to every 3 to 5 years need core maintenance, each year also need a certain proportion of live detection. In the long run, the revenue, cash flow and profit of this business are expected to exceed the current traditional manufacturing and sales, which requires a long period of accumulation and precipitation.

Q: What is the revenue situation in overseas markets?

A: In recent years, the company's overseas business has maintained an annual growth of about 20%, which is developed on the original low base, the development of overseas business is a process from quantitative change accumulation to qualitative change, the early development is slow, once a market is formed, the order volume will accelerate, when the market proportion reaches a certain height, the growth rate will slow down, at this time it is necessary to lay out a new market, the company's goal is to gradually improve the market share step by step, these need to do a lot of basic work and preparation, Patience is needed to push forward.

Q: What are the current large overseas markets?

A: The company's current overseas markets are mainly Brazil, Southeast Asia, Russia and so on.

Huaming Equipment's main business: engaged in transformer on-load tap-changers and non-excitation tap-changers and other transmission and transformation equipment research and development, manufacturing, sales and service

Huaming Equipment's 2021 third quarter report shows that the company's main revenue was 1.092 billion yuan, up 21.93% year-on-year; net profit attributable to the mother was 384 million yuan, up 47.88% year-on-year; deducted non-net profit of 160 million yuan, up 42.54% year-on-year; among them, in the third quarter of 2021, the company's single-quarter main revenue was 408 million yuan, up 23.45% year-on-year; single-quarter net profit attributable to the mother was 84.1869 million yuan, up 67.93% year-on-year. The non-net profit deducted in a single quarter was 81.1144 million yuan, up 67.66% year-on-year; the debt ratio was 32.91%, the investment income was 9.3953 million yuan, the financial expense was 44.953 million yuan, and the gross profit margin was 50.23%.

The unit has not had an institutional rating in the last 90 days. The Securities Star Valuation Analysis Tool shows that Huaming Equipment (002270) has a good company rating of 2.5 stars, a good price rating of 2 stars, and a comprehensive valuation rating of 2.5 stars. (Rating Range: 1 ~ 5 stars, maximum 5 stars)