Originated in the automobile industry, overtaking at corners in the field of lithium electricity

Shanhui technology originated in the automotive high-end intelligent equipment industry, and took the overlapping area of the automotive industry and the battery industry as a breakthrough to expand the lithium electric module-PACK business, with the help of years of experience in the automotive industry to overtake in the corner to become the leading company in the subdivision field. In 2021, the company's new energy sector accounted for 94% of revenue, an increase of 179% over the same period last year. The new energy business based on module & PACK has gradually become the company's main business.

From 2018 to 2021, the company's revenue and return net profit CAGR were 39.56% and 72.18% respectively, of which the 2021 revenue and return net profit were 11.02 yuan and 70 million yuan respectively, an increase of 119.36% and 15.36% over the same period last year. The company has plenty of new orders in 2021, of which new energy orders account for more than 95%. It is expected that new orders signed by the company will continue to increase in 2022.

Focus on the module-PACK business, multi-dimensional advantages shape the module of the company-PACK product range and strong competitiveness. 1) Module & the high automation of PACK production line leads the industry. The automation rate of company module and PACK line is 95% and 89% respectively, which is much higher than the industry average of 40% "70%" and 5% "20%. 2) the modular architecture improves work efficiency, and the company splices the production line into standardized modules such as Level2 and Level3 through the accumulation of core technology, reducing the order delivery cycle to 6 months and reducing many costs. 3) Core business cross-complement to build product ecology, the company's high-end automotive equipment manufacturing and lithium battery business cross-complement to give full play to the module-PACK production line between the whole vehicle factory and the battery factory, intelligent automation equipment and industrial manufacturing data system cross-complement to achieve the deep cooperation of software, communication and hardware to create spillover value.

Capital operation industry coordination, deep binding of high-end customers

The company is positioned in high-end projects and binds high-quality customers. The customers of its power battery module-PACK production line are not only for leading lithium power enterprises such as Ningde era, Funeng Technology, but also for high-end automobile companies such as Daimler, BMW, Volkswagen, etc., of which Ningde era orders account for more than 60%.

The company plans to pay 816 million yuan in cash for 51% stake in Ningde Dongheng.

From 2020 to 2021, the operating income of Dongheng in Ningde was 4.14 yuan and 904 million yuan respectively, an increase of 118% over the same period last year, and the net profit of returning mother was 0.62 yuan and 142 million yuan respectively, an increase of 130.00% over the same period last year.

The lithium battery structure products produced by Ningde Dongheng are expected to produce upstream and downstream coordination with the company's new energy vehicle automation equipment and empower the production capacity and technical fields. at the same time, the company will also make use of Ningde Dongheng's existing market share advantage and gross profit margin advantage to deepen binding with Ningde era.

Capacity expansion embraces hundreds of billions of markets

The company is currently in a capacity climbing period, and the factories are running at full capacity. By the end of 2021, the total factory area of the company was 72000 square meters, an increase of 355% over the same period last year, and the total number of people of the company was 2367, an increase of 199% over the same period last year. It is expected that the total factory area of the company will be expanded to 140000 square meters by the end of 2022, double that of the same period last year.

From 2022 to 2025, the production expansion of cell factories at home and abroad accelerated the rapid development of module-PACK field. According to our calculation, the market space of domestic module & Pack from 2022 to 2025 is 216.19 yuan, 400.32 yuan, 469.15 yuan and 30.836 billion yuan respectively, totaling 139.401 billion yuan, while that of overseas module & Pack from 2022 to 2025 is 36.34 yuan, 124.98 yuan, 156.51 yuan and 16.535 billion yuan respectively, totaling 48.318 billion yuan. The company deeply binds the head customers such as Ningde era in the domestic market at the same time actively expand overseas markets through German and American wholly-owned subsidiaries, and the company's development prospects are booming in the hundreds of billions of markets.

Investment suggestion

Without considering the Ningde East Heng merger Table, it is estimated that from 2022 to 2024, the company's operating income will be 26.33,42.95 and 5.346 billion yuan respectively, which is + 139%, + 63% and + 24% respectively compared with the same period last year; and the company's net profit will be 2.54,4.32 and 593 million yuan respectively, + 263%, + 70% and + 37% respectively compared with the same period last year, and the corresponding PE will be 31.31,18.40,13.41 times respectively.

Assuming that Ningde Dongheng starts to consolidate in 2022, based on the performance commitment, the company is expected to achieve net profit of 3.31,5.14 and 680 million yuan respectively, with the same caliber year-on-year of + 132%, + 55% and + 32% respectively, and the corresponding PE is 24.06,15.48,11.70 times respectively.

Cover for the first time, giving a "buy" rating.

Risk factors.

Lithium power expansion is not as expected; asset restructuring risk; customer concentration is too high risk; profitability is lower than expected; the rebound of the epidemic affects plant production.

Taking into account the risk factors that the company's profitability is lower than expected, do a sensitivity analysis based on the company's profitability in 2022-2024:

Under the optimistic assumption of profitability, it is estimated that the return net profit of the company from 2022 to 2024 will be 2.78,4.72 and 644 million yuan respectively, which is + 297%, + 70% and + 37% respectively compared with the same period last year, and the corresponding PE is 28.61,16.86,12.35 times respectively. Under the profitability neutral assumption, it is estimated that the company's net profit from 2022 to 2024 will be 2.54,4.32 and 593 million yuan respectively, which is + 263%, + 70% and + 37% respectively compared with the same period last year, and the corresponding PE will be 31.31,18.40,13.41 times respectively.

Under the pessimistic assumption of profitability, it is estimated that the company's net profit from 2022 to 2024 will be 2.30,3.93 and 542 million yuan respectively, which is + 228%, + 71% and + 38% respectively compared with the same period last year, and the corresponding PE will be 34.57,20.25,14.66 times respectively.