Event: the company released its semi-annual report for 2021, with revenue of 351 million yuan, an increase of 57.51% over the same period last year, and a net profit of 61 million yuan, an increase of 84.40% over the same period last year. In the first half of the year, the rapid growth of the company's performance mainly benefited from the volume of lithium-ion equipment business. We believe that the high demand in the industry, high customer quality, and the development of new products and services will make the company's lithium business continue to grow rapidly in the future. At the same time, with the forward-looking layout in the field of energy storage, the company's energy storage business is expected to become a new growth pole in the future.
Main points of investment:
The performance of 2021H1 is growing rapidly. In the first half of 2021, the company achieved operating income of 351 million yuan, an increase of 57.51% over the same period last year; the net profit attributed to shareholders of the parent company was 61 million yuan, an increase of 84.40% over the same period last year, deducting 59 million yuan of non-parent net profit, an increase of 111.73% over the same period last year. In terms of profitability, 2021H1's gross profit margin was 50.80%, down 3.2pcts from the same period last year, the expense rate was 32.57%, 2.57pcts was down from the same period last year, and the net profit rate was 18.14%, up 2.78pcts from the same period last year.
Revenue from lithium-ion equipment increased by about 60% compared with the same period last year. After the industry experienced a reshuffle in 2019 and the impact of the epidemic gradually weakened in 2020, with the continuous improvement of the penetration rate of new energy vehicles, the prosperity of the lithium equipment industry continued to improve rapidly, driving the company's related business to expand rapidly. In the first half of 2021, the company's revenue from lithium battery equipment was about 300 million yuan, an increase of 59.62% over the same period last year.
Lithium power business is expected to continue to grow rapidly in the future. Under the general trend of electrification, we expect the global penetration rate of new energy vehicles to be 19% in 2025, corresponding to the demand for 1064GW for power batteries, which will drive the demand for lithium-ion equipment, the CAGR will be about 27% in 2021-2025. The company is a leading intelligent manufacturing solution supplier with lithium battery testing system as the core, directly benefiting from the continued prosperity of the industry. From the product point of view, according to the major daily operation contract disclosed by the company on August 6, 2021, from the beginning of this year to the beginning of August this year, the company signed a new order of 423 million yuan with the Ningde era. And compared with the equipment to be provided in the major contract for daily operation disclosed on December 10, 2020, new equipment has been added, which shows that the company and Ningde era continue to maintain a good cooperative relationship. On the other hand, it shows that the company's expansion from testing equipment to chemical capacity equipment has achieved results. In addition, 2021H1's testing service business achieved revenue of 33 million yuan, an increase of 80.58% over the same period last year. The company's customers cover battery factories, vehicle factories, research institutes and other units, and the testing service business is expected to develop rapidly in the future.
Energy storage is expected to become the company's new growth pole. According to CNESA, the total capacity of China's operational energy storage projects is 35.6GW by the end of 2020, of which only 3.81GWh is the new type of energy storage. According to the policy, the market space for new energy storage in the next five years is about 26.19GW, with an annual compound growth rate of 51.09%. In terms of energy storage business, the company is mainly oriented to the integrated charging stations of energy storage and storage, charging and inspection on the grid side. The company has decided to increase investment projects, new energy vehicle battery intelligent manufacturing equipment and intelligent power station converter control system industrialization project, with an estimated annual output of 120 sets of energy storage converters (PCS), 8000 UPS converters and 1100 sets of charging piles. Time Nebula, a joint venture between the company and Ningde Times, has been involved in a number of projects, including Jinjiang Energy Storage Power Station Phase I (30MW/108.8MWh) and Ningde era Energy Storage Microgrid project (integrated optical storage, charging and inspection).
Investment suggestion: according to the company's semi-annual performance report, taking into account the company's new orders and the high prosperity of the lithium industry, the company's profit forecast is raised. The company's income from 2021 to 2023 is expected to be 908 million yuan, 1.255 billion yuan and 1.593 billion yuan, and the EPS is 0.88 yuan per share, 1.69 yuan per share and 2.21 yuan per share. The current share price corresponds to a price-to-earnings ratio of 70X, 36X and 28X, respectively. Taking into account the continued growth of industry demand, as well as the company's development prospects in the field of lithium electricity and energy storage, maintain the "buy" rating.
Risk hint: the risk that the iteration of technology update is not as fast as expected, the risk that the penetration rate of new energy vehicles is not as fast as expected, and the risk that the popularization of energy storage is not as fast as expected.