The highlight of the company
(1) China Chuangxin Airlines is a leading power battery company in China, mainly providing power batteries and energy storage system products for new energy vehicles. The company has a comprehensive independent research and development capability and can independently complete the power battery production, in the track record period, the company's cumulative sales of power batteries reached 19.43GWh. According to Frost Sullivan, the company has outsold 10GWh as a leading power battery manufacturer.
(2) guided by the launch of highly competitive new energy vehicle batteries and energy storage system products, the company has high-voltage ternary batteries with high energy density, long life and high safety, high safety level of [bullet] batteries, all-polar ear laminated batteries with specific accumulated energy density advantages and fast charging performance, and industry pioneering products [One-stop Bettery] batteries with innovative minimalist structure. It shows market-leading product power in terms of energy density and safety, two key characteristics of power batteries. According to Frost Sullivan, the proportion of R & D personnel in the company is higher than the average level of listed companies in the top 10 companies in the power battery industry, and the company is also the provincial enterprise technology center in Jiangsu.
(3) in terms of installed capacity, as of March 31, 2022, the company's market share was 8.2%, ranking third among Chinese power battery enterprises and sixth among global power battery enterprises.
Industry prospect
Power battery is one of the most critical components of new energy vehicles, which is very important for the power, service life, safety and service life of new energy vehicles. Benefiting from the growth of the global new energy vehicle market, the power battery market is booming. China is currently the largest power battery market, and the installed capacity of power batteries in China achieved a compound annual growth rate of 43.5% between 2017 and 2021. The "carbon Dafeng Action Plan before 2030" issued by the State Council proposes to achieve 40% of clean energy-powered vehicles by 2030, giving strong impetus to the development of the new energy vehicle market and promoting the rapid growth of power battery demand. In recent years, due to the upgrading of battery technology and the expansion of production scale, while the performance of power battery is improved, its average cost is greatly reduced and there is still room for decline, which further stimulates the sales market of new energy vehicles and promotes the development of battery market. The installed capacity of power batteries in China is expected to reach 762.0GWh in 2026, achieving a compound annual growth rate of 34.9% from 2022 to 2026.
Company operation
From 2019 to 2021, the company's income increased from RMB 1.73 billion yuan to 6.82 billion yuan, and its performance increased rapidly. Gross profit increased from 83.25 million yuan in 2019 to 380 million yuan in 2021, with overall gross margins of 4.8%, 13.6% and 5.5%, respectively. The change in gross profit margin is affected by price fluctuations of battery raw materials (including cathode materials and electrolytes) and capacity expansion. The overall gross profit margin fell from 13.6% in 2020 to 5.5% in 2021, mainly due to the sharp rise in the price of raw materials. The company's R & D expenditure increased from 140 million in 2019 to 290 million in 2021, and the proportion of R & D expenditure in total revenue decreased from 7.8% in 2019 to 4.2% in 2021. The company's attributable profit / net loss changed from a loss of 120 million yuan in 2019 to a profit of 140 million yuan in 2021. As of the end of 2021, the company held cash and cash equivalents of 3.11 billion yuan.
Valuation level
We selected two listed power battery companies: 300750.SZ (Ningde) and 1211.HK (BYD). The average price-to-earnings ratio of the industry in fiscal 2021 was about 73.9 times. The company is calculated on the basis of 1.772 billion of the total share capital after the global public development offering, assuming that the over-allotment option has not been exercised, the corresponding market value is 673.5-90.39 billion Hong Kong dollars, and the price-to-earnings ratio of the company for fiscal year 2021 is about 481.0-645.5, which is much higher than the industry average.
The track record of people with stable prices
The price stabilizer is Huatai, who has participated in a sponsor project since the beginning of 2022, which fell on the first day.
Market atmosphere
In the first half of 2022, the atmosphere of Hong Kong new stock market was depressed, and the pace of Hong Kong stock IPO accelerated in the third quarter. Since July, 26 new shares have been listed in Hong Kong. The HKEx has welcomed 10 listings since August, but only three of them closed higher on the first day. In terms of the industry, the market mood was pessimistic in 2022 due to the epidemic situation, residents' confidence and other factors. In addition, due to the recent industry leader BYD encountered major shareholder Berkshire Hathaway sell-off, triggered a sharp adjustment in the sector.
Cornerstone aspect
A total of 15 cornerstone investors have been introduced, including Tianqi Lithium, Hongsheng International, Dazhong Laser, Zhongwei Hong Kong, Tibet Norde, Heshi Composite, Changzhou Fine Test, Xingfa Hong Kong, XPeng Inc., TMA, Mr. Lv Lizhi, Jiangsu Puzheng Precision, Weiwo Mobile, Jiangmen New Energy, Hefei Beicheng and other 15 cornerstone investors, assuming that the over-allotment option has not been exercised according to the median offer scope of 44.50 Hong Kong dollars, a total of 125 million shares have been applied for. It accounts for 41.30% of the offering shares.
Purchase proposal
China New Airlines is the third largest power battery manufacturer in China, with a deep accumulation of manufacturing engineering technology and industry-leading large-scale operation capacity. With the rapid development of the new energy vehicle market, the revenue of China New Airlines has increased rapidly in recent years, and it will turn a loss into a profit in 2021. In the future, with the continuous improvement of the penetration rate of new energy vehicles, the company has broad prospects. On the other hand, the company is litigating six patents with the power battery leader Ningde era, which may have an adverse impact on business and financial conditions. Taking into account the high valuation of the company, the recent rise in raw material prices, affected by the bad news in the market, the performance of new energy vehicles and power battery plates is low. Therefore, with a comprehensive score of 61 points and a rating of "neutral", investors can continue to pay attention after listing.
Risk hint
(1) fierce market competition, (2) fluctuation of raw material prices, (3) patent litigation in Ningde era