Incident: The company announced the signing of a major sales contract. It intends to sell supporting equipment for lithium battery production to Mianyang Gaoxin Exxon New Energy Technology Co., Ltd. The contract amount is 394 million yuan (tax included), and delivery and acceptance are expected to be completed in 2023.

Promote the implementation of strategic cooperation and lay the foundation for subsequent cooperation. In November 2022, Hanchuan Intelligence signed a “Strategic Cooperation Agreement” with Shenzhen Exxon New Energy Technology Co., Ltd. on lithium battery-related production equipment and other businesses. Exxon plans to place purchase orders for the first batch of lithium batteries of not less than 3 GWh from Hanchuan or its affiliated companies, and prioritize the procurement of the company's equipment in the subsequent 50 GWh investment. The signing of this contract further promoted the implementation of the strategic cooperation framework between the two sides and laid the foundation for subsequent cooperation.

Strengthen the lithium battery business layout and build core advantages. The company focuses on the main waterways of new energy and vehicle electrification and intelligence, focusing on developing the three major businesses of automobiles, batteries, and charging and switching equipment. Among them, the main products of the battery equipment business include high-speed battery assembly equipment and chemical packaging equipment. The execution of this contract will help strengthen the layout and strategic implementation of the company's lithium battery equipment, further expand the company's influence in this field, and build the company's core advantages.

Investment advice: With the release of the company's production capacity and the execution of the contract, the company is expected to experience an increase in volume and price. We expect the company's net profit to the mother in 2022-2024 to be 127/245/371 million yuan respectively, and the current market value corresponding to PE is 53/28/18 times respectively. Considering the company's high downstream demand and rapid growth in the power exchange business, 35xPE was given in 2023, corresponding to the target price of 79.2 yuan, maintaining the “strong push” rating.

Risk factors: Risk of downstream market policy changes, new business market development falling short of expectations, capacity expansion falling short of expectations, etc.