Incident: The company released its 2021 performance forecast. In 2021, the company expects to achieve net profit of 48 million yuan to 54 million yuan, a year-on-year decrease of 63%-58%, and net profit of 42 million yuan to 49 million yuan after deduction, a year-on-year decrease of 66.5% to 61.4%.
Results in 2021 were under pressure, and lack of cores plus rising raw materials affected profitability. The main factors affecting the company's performance in 2021 include: 1) fuel dispenser: sales fell sharply due to VW's lack of cores in 2021. The company shipped about 2 million sets of fuel dispensers, a year-on-year decline of nearly 30%; 2) automation business: rising raw material prices affected the profitability of orders; 3) a sharp increase in testing costs and R&D investment for carbon dioxide products; 4) the release of production capacity of national six b fuel dispensers, but capacity utilization was still low and amortization pressure was high. Taken together, the impact of the shortage of chips, rising raw materials, and some expenses on the company's short-term profitability is quite obvious, but the impact on the company's medium- to long-term profitability is relatively limited.
Core shortage mitigation+heat management release, the inflection point of 2022 performance is clear. According to the company announcement, new orders for H1's automation business are expected to exceed 250 million yuan in 2021. The core growth point of the company's automation business is the automated production line for flat-line motors. Major customers include United Auto Electronics, etc., with sufficient in-hand orders, and the growth rate is highly certain. Fuel dispenser: As the impact of Volkswagen's lack of cores abates, combined with the release of new Audi products and models, it is expected that the company's traditional auto parts will gradually recover in 2022.
CO2 products are gradually being released, and new customers are expected to set targets one after another. The driving factors of the company's CO2 heat pump air conditioning revenue growth mainly include: 1) the volume of original customers, the volume of domestic+overseas Volkswagen ID series models can be expected to be released, the superimposed CO2 heat pump selection rate is expected to gradually increase, and CO2 pipeline shipments can be expected in 2022; 2) New product expansion increases the value of bicycles. According to the company announcement, the company's valve products are being actively developed and tested; 3) New customer expansion. The company's CO2 pipeline and valve products are expected to be actively expanded to major new domestic forces, independent brands and joint venture customers, etc. New car company targets. We believe that the company's thermal management product line and new customer expansion will be the company's core growth point in the next 3-5 years. Currently, the industry is still in its infancy, and there is plenty of room for future penetration.
CO2 heat pump air conditioning is expected to become the mainstream technology. The advantages of CO2 heat pump air conditioners mainly include: 1) environmental friendliness. Unlike traditional hydrogen fluoride refrigerants, CO2 as a refrigerant has almost no effect on environmental pollution; 2) energy efficiency. Compared with traditional hydrogen fluoride refrigerant heat pump air conditioning+low power PTC scheme, the energy saving effect of CO2 heat pump air conditioning+low power PTC scheme is obvious at low temperature; 3) the heating performance is good. CO2 COP is greater than R1234yf, the heating efficiency is high, and the user experience is better. It is expected that with the domestic replacement of core components such as compressors and electronic expansion valves, and the gradual realization of scale effects, the cost of CO2 heat pump air conditioners is expected to be further reduced, gradually approaching the traditional HFC refrigerant heat pump air conditioning scheme, and the selection rate is expected to continue to increase.
Investment advice: It is estimated that in 2021-2023, the company will achieve operating income of 498/10.46/1,673 billion yuan and net profit of 0.56/189/334 million yuan. The current stock price corresponds to PE 130/38/22 times. As the company was affected by the rise in raw materials and the lack of strength in the automotive industry, we lowered the company's profit forecast. Combined with the average valuation situation of various industry segments, considering the high technical barriers of CO2 products and the future expansion of new customers and new products, we gave the company's new energy vehicle business a certain valuation premium. After segmented valuation, the target market value was about 11.3 billion yuan, maintaining the “buy-A” rating. The six-month target price was 43.47 yuan/share.
Risk warning: The prosperity of the automotive industry fell short of expectations, the volume of new products fell short of expectations, production and sales of key customers fell short of expectations, and the penetration rate of CO2 heat pump air conditioning systems fell short of expectations.