The company is a leading domestic light power lithium battery enterprise, covering light vehicle lithium-ion batteries, energy storage batteries, consumer batteries and lithium-ion batteries. In 2021, the company's overseas revenue accounted for about 52%. In Europe, the market share of lithium batteries for electric bicycles reached 20%, ranking in the forefront of the industry. With the continued prosperity of the electric two-wheeler industry at home and abroad, driven by superimposed policies and consumption upgrading, the company is expected to maintain steady growth in the field of light vehicle lithium-ion batteries; at the same time, the company seizes the development opportunity of the energy storage industry, focusing on portable and household energy storage products, capacity utilization flexibility, is expected to benefit from the outbreak of industry demand, business growth is significant.
We use the comparable company PE valuation method to value the company 26x PE in 2023, corresponding to the target market value of 7.8 billion yuan and the corresponding target price of 78 yuan per share, covering and giving a "buy" rating for the first time.
The company is the leader of domestic light power lithium battery industry. Founded in 2010, the company mainly engaged in consumer lithium-ion batteries, and then launched a series of products such as electric bicycle battery, mobile power supply, automobile emergency start power supply and so on. Since 2016, the company has adjusted its development plan to focus on the field of lithium-ion batteries for light vehicles. In 2017, through the acquisition of the upstream lithium-ion battery manufacturing field of Cade's new energy layout, it has grown into a leading enterprise of lithium-ion batteries for light vehicles. In 2021, the company has a market share of about 20% in the European electric bicycle lithium battery market, ranking in the forefront of the industry. Benefiting from the growth in demand for electric two-wheelers and energy storage markets at home and abroad, the company realized revenue of 1.431 billion yuan in 2021, 54.91% of the same period last year, and 1.23 million yuan of net profit, respectively, compared with the same period last year. 1.95%, + 75.25%, respectively. Affected by the global macroeconomic environment and the COVID-19 epidemic, as well as factors such as rising raw material prices, the company's H1 revenue and return net profit in 2022 were 1231 million yuan and 0.79 million yuan respectively, which were 8.00% respectively compared with the same period last year.
The prosperity of the electric two-wheeler industry continues, and the upgrading of policies and consumption promotes the growth of the industry. From the perspective of driving factors, China issued a "New National Standard" in 2019, which requires that the quality of electric bicycles is lower than that of 55kg. Lithium battery is expected to gradually replace lead-acid battery because of its advantages over lead-acid battery in quality, performance, service life and average cost. From the perspective of overseas markets, there is a strong cycling culture in Europe, and major countries have launched electric bicycle subsidy programs with subsidies ranging from 50 to 1000 euros. The Biden government of the United States introduced the "rebuilding a better Future Act" in 2021, which provides a 30% refundable tax credit for the purchase of electric bicycles and motorcycles. Encouraged by the subsidy policy, overseas e-bike sales are expected to continue to grow and maintain the momentum of sustained development. With the catalysis of the epidemic and the upgrading of consumption around the world, the development process of electrification of the bicycle industry has accelerated. We estimate that global sales of electric bikes are expected to reach 14.3 million by 2025, corresponding to 19% of CAGR in 2021-2025, which will effectively boost the demand for lithium-ion batteries for electric bicycles and have a broad market in the future.
The prospect of energy storage industry is broad, and the demand of small and medium-sized energy storage market is strong. According to the different application scenarios, the energy storage market is mainly divided into three categories: generation side, grid side and user side. Among them, there is a strong demand for small and medium-sized energy storage such as portable energy storage and household energy storage market. 1) Portable energy storage: on the one hand, under the normal epidemic prevention and control, the global outdoor sports enthusiasm is high, and outdoor power supply has become the mainstream of short-distance power consumption; on the other hand, uncertain factors such as epidemic situation and power outage push up the reserve demand in emergency scenarios, and the use of portable energy storage increases. According to GGII data, the global shipments of portable energy storage devices will reach 4.838 million in 2021. GGII predicts that the global shipments of portable energy storage devices will reach 31.1 million by 2026, corresponding to 5-year CAGR+45%. Global shipments of portable energy storage batteries in 2021 are 1.3 GWH and GGII. It is expected that shipments will reach 8.4GWh by 2026, corresponding to 5-year CAGR+45%. 2) Household energy storage: residents in Europe and other regions face high electricity prices, which are reduced by superimposed on-grid electricity price subsidies (Feed-in tariff,FiT), and the economy of self-use of optical storage is highlighted. According to GGII data, the new installed capacity of global household storage in 2021 is about 6.4GWh, which is expected to reach 100GWh by 2025, corresponding to 98.8% CAGR in 2021-2025.
Light power industry leader, portable and household energy storage business is growing rapidly. The company is a domestic light power leader, the main advantages are: 1) Technology: the company's light vehicle lithium-ion battery pack adopts 36V nominal voltage platform, the highest capacity can reach 20Ah, the communication mode is more diverse, the system is compatible and flexible, and the waterproof grade can achieve IPX7, which is higher than Bosch and BMZ, and the product performance is in the leading position in the industry. 2) customer:
The company has high-quality customer resources, and has foreign high-quality customers in the field of light electric vehicles, such as Prophete in Germany, EUROSPORT in Romania, EB Component in Denmark, Manufacture Francaise in France, etc., and has developed well-known electric two-wheeler enterprises in China, such as Niu Technologies, Yadi Holdings, Emma Technology, Xinri Stock and so on. In addition, the company has also successfully developed electric off-road motorcycle customers such as Qiu long Technology, as well as customers such as DJI, Xinbao and GOAL ZERO in the field of consumer electronics and energy storage products. 3) supply chain: the company's lithium-ion battery pack products adopt the combination of self-produced cells and purchased cells. In 2017, the company acquired the upstream cell field of Cade new energy layout, along with the company's further investment in cell production and application, as well as the switch to large cell platform, we expect the proportion of self-produced cells to be further increased and profitability. 4) Energy storage: the sales of the company's energy storage products are mainly portable and household energy storage products. From 2019 to 2021, the company H1's energy storage business revenue was 0.150.53 billion yuan respectively, compared with the same period last year. The company's portable energy storage products are bound to overseas customers by binding overseas customers GoalZero. The percentage of revenue is 1.54%, 3.94%, 6.10%, 10.1%. Open up the portable energy storage market in the United States Household energy storage products are excellent, mainly manufactured by PACK, and the capacity utilization rate is flexible. It is expected to benefit from the overseas household energy storage demand and is expected to maintain rapid growth.
Risk factors: light electric bicycles industry demand lower than expected risk; energy storage industry demand lower than expected; lithium battery industry competition increased risk; raw material price rise risk; the company's customer development is not as expected risk; technology route change risk.
Investment suggestion: the company is a leading domestic light power lithium battery enterprise, covering light vehicle lithium-ion batteries, energy storage batteries, consumer batteries and lithium-ion batteries. In 2021, the company's overseas revenue accounted for about 52%. In Europe, the market share of lithium batteries for electric bicycles is 20%, ranking in the forefront of the industry. With the continued prosperity of the electric two-wheeler industry at home and abroad, driven by superimposed policies and consumption upgrading, the company is expected to maintain steady growth in the field of light vehicle lithium-ion batteries; at the same time, the company seizes the development opportunity of the energy storage industry, focusing on portable and household energy storage products, capacity utilization flexibility, is expected to benefit from the outbreak of industry demand, business growth is significant. We estimate that the annual homing net profit of the company in 2022-23-24 is 1.83gamma 302x412 million, corresponding to the forecast of EPS is 1.83gamma 3.02x4.12, and the current price corresponds to the annual PE of 3320x15x in 2022-23-24. We select the companies related to the lithium-ion battery industry chain, Penghui Energy, Yiwei Lithium Energy, Xinwanda Technology, as comparable companies, with an average PE of about 26x in 2023 (of which Penghui Energy, Yiwei Lithium Energy and Xinwangda are Wind PE). We value the company at 26x PE in 2023, with a target market value of 7.8 billion yuan and a target price of 78 yuan per share, covering and giving a "buy" rating for the first time.
