Low valuation advantage leading company, benefiting from new energy flat line change
Jinbei Electric is the largest wire and cable manufacturer in the central region and one of the leading manufacturers of electromagnetic wires for UHV transmission and transformation equipment, high-voltage motors and motor drives for new energy vehicles. The company adheres to the route of acquisition and merger, and has successively acquired high-quality companies in the industry, such as Wuhan second Line and Unification Electrical Engineering, further determining the company's leading position in the field of wires and cables. As Tesla, Inc. begins to deliver the Model 3max Y model with domestic motors, the trend of flat wire replacing round wire has become, and the company will benefit from the accelerated increase in the permeability of flat wire motors. We estimate that the return net profit of the company from 2021 to 2023 is RMB 594 million and EPS is RMB 0.49, respectively, and the current share price is 17.5, 12.5 and 10.6 times, respectively. Cover for the first time, giving a "buy" rating.
Permeability enhancement logic: the advantage of the flat line motor is outstanding, and the permeability is expected to accelerate the promotion of the flat line investment opportunity for the industry dividend at the present stage, which mainly comes from the accelerated substitution of the flat line motor for the round wire motor, and continues to be optimistic about the industry β. We expect the permeability of the flat line motor to reach 90% in 2025. Global electrification leads the development of new energy vehicle drive motor to high performance, high efficiency and high power density, which is bound to put forward higher requirements for drive motor. The flat wire motor is the first choice of the drive motor in the future, which is the consensus of the major mainframe manufacturers at home and abroad.
We estimate that the total global demand for flat lines will reach nearly 156000 tons in 2025, and the market space for flat lines will exceed 12 billion yuan.
Growth logic: the short-term competition pattern is improving, and the advantages of long-term technology leading enterprises highlight that in the first half of 2021, the operating income of Jinbei Electrical electromagnetic Wire business reached 1.446 billion, an increase of 175.43% over the same period last year.
In the short term, manufacturers of high-end electromagnetic wires are limited, and flat wires are in short supply. The production technology of flat wire for driving motor of new energy vehicle is difficult and highly bound with customers. with the increase of permeability of downstream flat line motor, enterprises with fast production expansion and strong supply capacity can obtain larger market share in a short time. In the long run, enterprises that master core technologies will have greater competitive advantages. Jinbei Electric uses the up-drawing method to produce its own copper rod, and introduces the international most advanced five-station finishing rolling equipment from France; in addition, Jinbei Electric has 800V high voltage motor drive winding solution, with the development of new energy vehicle drive platform to high voltage. Jinbei electrician's competitive advantage will be more obvious.
Risk tips: upstream raw material price fluctuations; flat line motor permeability is lower than expected; industry competition intensifies.