Professional managers settled in, 30 years old fuse brand coruscate the second spring. The company was founded in 1992 and has focused on the fuse market for 30 years. Its main products are electronic fuses, power fuses, self-recovering fuses and other overcurrent and overheating circuit protection components, which are used in electronic devices, industry, automobile, housing and other fields. In May 2021, Mr. Tang Qiqing succeeded the Huang family as the company's new actual controller, while the professional manager team settled in. Establish the new energy market as the key development direction of the company in the future, the 30-year-old brand coruscate the second spring.
Demand: new energy is expected to recreate another market no less than traditional fuses. We estimate that the global fuse market in 2020 is about 15.3 billion yuan, of which the traditional fuse market represented by mobile phones, household appliances, traditional power generation / transmission / distribution and low-voltage vehicles is about 13.5 billion yuan. The market base is large but the growth rate is relatively stable. The volume of the new energy market represented by new energy vehicles and scenery storage is relatively small, but due to the high unit price of products, the increase of new energy vehicle permeability and the rapid growth of wind power storage capacity, we estimate that its five-year CAGR in 2021-2025 is expected to reach 54.6%. In 2025, the new energy fuse market is expected to reach 16.3 billion yuan, coupled with the natural growth of the traditional fuse market (CAGR 3.5%). The overall market size of fuses is expected to reach 32.3 billion yuan in 2025.
Supply: foreign capital dominates the traditional fuse market, while China has a first-mover advantage in the field of new energy. Foreign capital occupies a large share in the traditional fuse, especially in the high-end market, and domestic enterprises mainly compete in the middle and low end market, and price becomes a key factor; in the new energy fuse market, China Electric has technical and service advantages, and is also in a leading position in terms of revenue scale. In the past, Haoli Technology's business was mainly concentrated in the traditional fuse market, but in recent years it has begun to layout the new energy field. Now it has cut into the photovoltaic and energy storage market, while accelerating the promotion of the new energy vehicle market. It is rapidly promoting cooperation with benchmark enterprises in the EV industry, such as Ningde era and BYD. At the same time, the company has cooperated with leading customers in the photovoltaic and energy storage industries, such as Sunshine Power supply and Hewang Electric. As of February 28, 2022, the company's electric power orders totaled 18.44 million yuan, a year-on-year increase of nearly seven times.
Growth logic: XYZ strategy drives the company to expand rapidly. X: consolidate the traditional market, make every effort to enter the new energy market, accelerate growth and improve gross profit margin; Y: explore market opportunities and transform into a circuit protection system solution provider; Z: invest in warp technology, and raise the valuation after the future GPU business consolidation. The gross profit margin of the new energy market is higher than that of the traditional market, and the prices of raw materials such as copper, tin and engineering plastics are expected to fall, and the company's gross profit margin is marginal.
For the first time, it gives a buy rating, with a 2023 target of PE 71x (0.8x PEG), with a target price of 56.55yuan. It is estimated that the company's homing net profit from 2022 to 2024 is 0.585 yuan, 1.038 yuan and 162.9 million yuan respectively, and the EPS is 0.45 yuan, 0.79 yuan and 1.25 yuan respectively. The compound profit growth rate for three years is 89%. The company will be given 0.8 times PEG in 2023, with a target PE 71x and a target price of 56.55 yuan.
Risk hint: the growth rate of new energy vehicles and Fengguang storage capacity is lower than expected; the decline in raw material prices is not as expected.
