The fixed increase fund-raising was successfully completed to help expand the production capacity of power exchange equipment

The company announced on March 24 that it had completed a fixed increase of issuance, raising capital of 953 million yuan. It was issued to 18 companies, including local state-owned assets, public placement, QFII, private equity and individual investors. It issued 164.4015 million shares of common stock at a price of 58.11 yuan/share, an 8.72% premium over the issuance reserve price. The fixed increase capital will be used to increase the production capacity of 2,000 power exchange stations, invest in flat wire motors and pulsed high magnetic field welding equipment, and supplement working capital, laying a good foundation for the company's long-term performance growth. We maintain the company's 2022-2024 performance forecast. The company's net profit for 2022-2024 is estimated to be 1.27/2.66/442 million yuan respectively. Due to changes in share capital, the corresponding EPS for 2022-2024 will be adjusted to 1.17/2.13 (-0.32) /3.54 (-0.53) yuan/share respectively. The current stock price corresponding to PE in 2022-2024 is 49.6/27.3/16.4 times, respectively. The company's three major businesses have made an overall breakthrough to maintain the “buy” rating.

A cooperation agreement was signed with Yuexiang Xiongan to accelerate the development of the power exchange business. On March 20, the company announced that it signed a 2-year strategic cooperation framework agreement with Yuexiang Xiongan Technology Co., Ltd. to cooperate closely in heavy truck exchange scenarios, power transactions, power management, smart microgrids, photovoltaic power generation, energy storage, etc., and jointly build the new energy heavy truck market. Yuexiang Xiongan, initiated by Dongfeng Group, is an integrated R&D and operation company for smart transportation and autonomous driving registered in Xiong'an New Area. The in-depth cooperation with Yuexiang Xiongan has further promoted the company's power exchange business layout, marking that the company has been recognized by industry customers in terms of commercial vehicle power exchange station equipment, equipment operation stability and service capabilities. It will also achieve complementary advantages and resource sharing between the two parties, and achieve industrial interaction and mutual benefit and win-win situation.

Focusing on the “automobile+battery+charging/switching” main waterway business, the company focused on automobile electrification and intelligent main waterways, and was deeply involved in the three major business areas of “automobile+battery+charging/switching” equipment. Power exchange equipment has been introduced to mainstream customers such as Ningde Era, GCL Energy Technology, Sunshine Mingdao, Blue Valley Intelligence, Jieneng Smart, and Yuexiang Xiongan, and is expected to continue to grow rapidly, opening up a second growth curve. Automotive electronics have leading global Tier 1 customers such as Tyco, Mainland, Anbofu, Bosch, etc., and products are being transformed to platformization and standardization, which will help improve long-term gross margin; the battery equipment business is progressing smoothly with Shenzhen Exxon, Zhengwei Group, Panasonic, etc., and stable performance contributions are increasing. The company's three major business segments are developing collaboratively, and revenue scale and profitability are expected to continue to increase rapidly.

Risk warning: sales of power exchange models fell short of expectations; competition in the equipment market intensified; downstream demand fell short of expectations.