Smart Grid Distribution Automation Market Starts

Distribution network automation smart grid investment top priority: Distribution network as the last link of the transmission and distribution system, its degree of automation and supply and use of electricity is closely related to the quality and reliability. Distribution automation is one of the important foundations of smart grids. From the investment constitution, we expect that the smart grid investment will constitute about 40% of the distribution automation, which is the top priority for smart grid investment.

China's distribution network automation is in its infancy: Distribution network automation is in its infancy in China, and the domestic city distribution network feeder automation rate is less than 10% . At present, the proportion of foreign distribution network automation has reached 60%-70% , and the domestic market is still just starting pilot projects. The market is vast.

The scale of the pilot program has been further expanded: At present, the State Grid has started pilot projects in four cities. The first batch of State Grid Corporation pilot cities for smart distribution networks include Beijing, Hangzhou, Xiamen and Yinchuan. The first batch of tenders has not yet begun; the second batch is expected; State Grid will conduct pilot projects in provincial capital cities and cities in separate cities. It is estimated that about 50 cities will conduct pilot projects. After the pilot trials in Guangdong and Shenzhen, China Southern Power Grid will further expand the scope of pilot projects and it is expected that pilot projects will be conducted in cities such as Guiyang, Nanning, Haikou and Kunming in 2010 . From the current perspective, the distribution network automation construction has entered a peak period from 2010 to 2011. It is estimated that nearly 10 cities will enter the pilot, and the entire market capacity will be around 10-20 billion.

In the long run, once successful pilots of large cities are bound to be promoted to second- and third-tier cities, and they may further penetrate into the county level in the future.

The market is vast: according to the average investment in each city master 50 million, acquisition terminal covering 20,000 each 20,000 yuan collection terminal is estimated that each urban distribution network automation in a total investment of between 450 million conservatively in accordance with the annual 10 The transformation of the cities is expected to have an annual average market capacity of around 4.5 billion yuan. In the initial stage of grid promotion, it is expected that the investment will be faster. It is expected that the next five years will be the peak period of investment in distribution automation, and related listed companies will benefit from this.

Key company recommendation:

Jicheng Electronics ( 002339 ) -- Leader in Distribution Automation Business, High Growth Expected : Distribution Automation In 2008 , China Southern Power Grid started pilot projects in Guangdong and Shenzhen. The distribution network master stations in both pilot cities were provided by the company. There are obvious advantages in this field. In the first half of 2010 , the company's distribution network automation realized revenue of RMB 43.49 million, accounting for 32% of the company's revenue, and it is the company's second largest revenue. In the future an annual 40-50 billion market, the company room for growth of broad distribution automation business, and the company as a higher proportion of the business performance of the company a higher sensitivity of the market. We expect the company's earnings per share for 2010-2011 to be 0.67 and 1.06 yuan respectively, corresponding to the current PE level of 58 times and 36 times respectively. Compared with valuations, the company has greater valuation advantages than other smart grid companies. Consider an investment rating that gives " buy " comprehensively.

State Power Nanrui ( 600406 ) - Distribution network business is expected to become one of the company's core businesses: The company's distribution automation business has a clear competitive advantage in the State Grid. In the four pilot cities in the first stage of the national grid power distribution network automation in 2009 , the company’s market share reached more than 50% . State Grid Corporation of China plans to launch the second pilot phase of distribution network automation in 2010 , involving 19 cities. It is expected that the company will continue to dominate and gain considerable market share.

The company’s sales of this product are still in its infancy, and there is huge room for growth in this business. It may become one of the core businesses of the company in the future. In addition, in addition to distribution automation, the company's existing core business grid dispatch automation and substation automation will benefit from smart grid advancement in the future. The company's other reserve businesses, such as photoelectric transformers , smart power, new energy access, power management systems, and charging stations, benefit from the smart grid's rapid growth. Without considering asset injection and dilution, we expect 2010-2011 EPS were 0.83 yuan, 1.39 yuan, the corresponding PE 2010-2011 years were 74 and 42 times, taking the smart grid investment to accelerate the company to benefit significantly, taking into account the acquisition of assets Extensive extension, giving " overweight " investment rating.