Recommendation logic: as the leader of atomization equipment, the company has a revenue of 13.76 billion in 2021, sustained high growth and bright profitability. Looking forward to the future: 1) with the landing of regulatory boots, the harm reduction and substitution of e-cigarettes to cigarettes after being incorporated into the tobacco system has become a general trend, and a broad space for growth has been opened. It is estimated that the penetration rate of e-cigarettes will increase to 17.7% by 2025, and the market size will reach 147.8 billion US dollars. 2) in the long run, the standardized development has raised the entry threshold of the industry, which is fully beneficial to the leading enterprises in the existing competitive pattern, and the concentration is expected to continue to increase. 3) as the leader of atomization equipment, Si Moore has far more competitive advantages than its peers in R & D reserves, technical details, automated production and yield levels. customer reserves and customer stickiness in domestic and foreign markets provide strong support for the company's sustained and rapid growth. It is expected that its market share in the global electronic atomization equipment field will increase to 28% by 2024.
Foreign supervision takes shape, and domestic regulatory boots fall to the ground. E-cigarettes take advantage of the situation under the background of tobacco control campaign by virtue of harm reduction attribute. At present, e-cigarettes are in the stage of low permeability and high growth, with a compound growth rate of 38.9% from 2015 to 2020. At present, the e-cigarette industry is in a period of adjustment under the influence of global regulatory standardization. FDA in the United States regulates various products by way of PMTA application, and the cooperative products of NJOY, Logic and the company have passed the examination, which is conducive to further strengthening the company's existing product advantages and core patents. In March this year, the domestic e-cigarette regulatory policy landed, with the continuous promotion of regulatory standardization, the industry threshold and concentration is expected to be greatly improved.
Atomization equipment leading revenue of more than 10 billion, leading profitability. In 2021, the company's revenue reached 13.76 billion, with a five-year compound growth rate of 81.1%, and a five-year compound growth rate of 118.6%. In terms of profitability, the company's profitability continues to climb, benefiting from technological iterations, the improvement of economies of scale and the optimization of sales structure. by 2021, the company's gross profit margin has reached 53.6%, an increase of 29.3 ppm since 2016, and the net profit rate has reached 38.4%. Excellent profitability.
The advantage of R & D and manufacturing is outstanding, and the competition barrier is solid. The company's core competitive advantages are as follows: 1) in terms of technology, the company strengthens its R & D reserves, leads the technology development path, closely tracks consumption trends, and FEELM Air/MAX and other new products continue to launch; 2) in manufacturing, the company grasps the key process details of the atomization core by large-scale manufacturing, maintains a high yield of products, and the product experience is significantly better than that of competitive products; 3) large customer reserves, strong stickiness, and large-scale production to form closed-loop coordination Under the PMTA system, the relationship between the company and the brand will be further deepened.
Profit forecast and investment advice. It is estimated that the EPS of the company in 22-24 is 0.68,0.89 and 1.12 yuan respectively, and the corresponding PE is 24 times, 18 times and 15 times respectively. Considering that the company is deeply bound with high-quality customers by virtue of its technology and capacity advantages, the competitive barrier firmly leads in R & D and maintains a "buy" rating.
Risk hints: the risk of stronger regulation than expected; the risk that the PMTA application pass rate is lower than expected; and the risk of new materials or technologies affecting the competitiveness of the company.