Events:

The company officially disclosed its annual report of 2021 and quarterly report of 2022 on April 14, 2022. In 2021, the company achieved a total revenue of 1.891 billion yuan, an increase of 65.47% over the same period last year, and a net profit of 25 million yuan, an increase of 103.94% over the same period last year. The basic EPS is 0.05yuan per share. In the first quarter of 2022, the company achieved revenue of 571 million yuan, an increase of 37.96% over the same period last year; net profit of 6 million yuan, down 12.29% from the same period last year; and basic EPS of 0.01 yuan per share.

Comments:

Benefit from the rapid development of new energy automobile industry

Benefiting from the rapid development of the new energy vehicle industry, the company's new energy vehicle drive motor business increased by 188% in 2021 over the same period last year. However, due to the rapid and sharp rise in the prices of commodities such as copper, silicon steel, aluminum and rare earths, higher costs cannot be transmitted to downstream customers in the short term, causing the company's comprehensive gross profit margin to fall by 1.65pct to 8.83 per cent. At the same time, because

For other reasons, the company prepares 29.04 million yuan for impairment of assets in inventory and intangible assets. However, in this case, the company still achieved a turnaround, with a net profit of 25 million yuan in 2021, an increase of 103.94% over the same period last year.

The supply of drive motor products falls short of demand, and its market share is firmly in the top three.

After years of technology accumulation and market development, the company's new energy-driven motor products have been recognized by customers and have established supporting supply relationships with Geely, SAIC GM Wuling, XPeng Inc., NIO Inc., Chery and other customers. and the company's production capacity has always been at full production. Thanks to the hot sales of Hongguang MINI EV, XPeng Inc. P7 and other models, the company's drive motor market share ranks third in China in 2021, second only to BYD and Tesla, Inc..

Set to increase production and consolidate its leading position

In order to meet the growing demand of downstream customers, the company began to expand production in the second half of 2021. The company plans to raise no more than 1 billion yuan, of which 700 million yuan will be used to expand the production capacity of 1.8 million sets of new energy vehicle drive motors, mainly flat line motors.

Profit forecast and investment advice

Considering that the impact of the price increase of raw materials in the upper reaches of this year has not been eliminated, we estimate that the operating income of the company from 2022 to 2023 is 29.63 / 4.773 billion yuan, and the net profit is 1.03 / 259 million yuan (the previous value is 1.56 yuan and 265 million yuan, respectively). At the same time, the profit forecast for 2024 is 7.73 billion yuan, the net profit is 420 million yuan, and the corresponding EPS is 0.2110.52cycle 0.84 yuan per share. The corresponding PE is 37.7x/15x/9.2x. Maintain a "buy" rating.

Risk hint

1) the risk that the sales of new energy vehicles fall short of expectations; 2) the risk of intensified competition in the industry; 3) the risk of rising prices of upstream raw materials; 4) the risk of impairment of goodwill.