Zhihong Precision: China's leading lithium battery pole cutting mold enterprises. In early 2021, the company completed the purchase of 100% stake in Zhihong Precision and successfully completed the transfer of ownership, making it a wholly-owned subsidiary of the company and allowing the company to successfully cut into the lithium battery track. Zhihong Precision is an enterprise engaged in the research, development, design and production of precision moulds. The company's existing products are mainly used in the production of lithium battery cells. After years of deep ploughing in the field of precision mold manufacturing, the company has become a leading lithium battery pole cutting mold enterprise in China, with process and technical indicators up to industry standards, and stands out in the competitive market dominated by Japan and South Korea.
The rapid growth of revenue is in the early stages of the performance. According to the information disclosed at present, Zhihong Precision achieved revenue of 49.22 million yuan in 2018 and 121.72 million yuan in 2021, with CAGR 35.23% during the period.
2022Q1 achieved revenue of 122.32 million, an increase of 67.46% over the same period last year. In terms of profit, Zhihong Precision's net profit increased from 1303 in 2018 to 128.12 million in 2021, and CAGR 114.24%. 2022Q1 realized a net profit of 62.02 million, an increase of 58.82% over the same period last year. Thanks to the continuous expansion of Zhihong Precision for new customers, at the same time, due to the technical leadership of related products, the price has also increased. At the same time, the new energy vehicle market continues to be hot, and the continuous expansion of downstream car companies and battery manufacturers has also promoted the company's business development.
Over-fulfilled performance commitments, 2022 orders, continuous cooperation. The achievement rates of corporate performance commitments in 2020 and 2021 were 116.38% and 210.69%, respectively. According to the company announcement in 2022, Zhihong Precision currently receives new orders in good condition. In January and March, respectively, it received 21.31 million and 31.68 million orders for polar ear punching dies from BYD; in April, it received 2391 million mold orders from Ningde ATL; in April, it successfully signed a long-term cooperation agreement with Huizhou BYD for blade battery long-term cutter for a period of 2 years.
The industry barrier is high, and the advantage of Zhi Hongjing is obvious. The electrode cutting die of lithium battery is an indispensable product in the production process of lithium battery battery. Once there are problems, it will affect the smooth production of lithium battery to a great extent. At present, the industry standard for burr is Va/Vb ≤ 15 μ m. Zhi Hongjing's products can achieve Va/Vb ≤ 10 μ m, of which 3C products can reach 5 μ m, which is a leading level in the industry. At the same time, with strong R & D capabilities, Zhihong Jingyun successfully developed Apple Inc mobile phone L-type battery pole cutting die, Huawei TWS headphone laminated battery and "blade battery" cutting knife for ALT and BYD New Energy in 2018-2019.
Profit forecast and investment advice: after the acquisition of Zhihong Precision, Dexin Transportation successfully cut into the new energy track, relying on the leading position of Zhihong Precision in the field of pole cutting die subdivision to continuously develop new customers, and the performance commitment is better. In 2024, we expect the company to achieve revenue of 73.2max, 1.84m, net profit of 2.8max, 550,000,000, and a "buy" rating for the first time, corresponding to the current share price PE39.0/22.0/14.6x.
Risk hint: downstream demand is lower than expected.