The current situation of the company
The sales of Huawei and other models continue to rise, and the company's new energy electric drive business accelerates its volume; the company sets up a new company in Ningde, Fujian, laying out new areas, and the new energy business continues to increase.
Comment
The core supplier of Huawei automobile motor has fully benefited from the increase in sales of supporting models such as M5, M7 and Avita. The company is the core supplier of Huawei automobile electric drive system, supplying drive motor stator and rotor assemblies, covering Huawei cooperative car companies such as Cyrus, Changan and BAIC, supporting star mass-produced models such as Qijie and Avita, is the exclusive supplier of multiple models. Monthly sales of the M5 have continued to climb since its launch, climbing to 7807 vehicles in July; after the release of the M7 on July 4, 48-hour orders exceeded 50, 000 vehicles. Avita 11, a tripartite partnership among Huawei, Ningde Times and Changan, is also scheduled to be officially launched on August 8. We believe that with the continuous development and growth of Huawei's automobile ecology, the sales of representative models such as the Q series will continue to rise, and the launch of new models will also be intensive, which will directly lead to high business growth of core suppliers. We believe that the company, as the current exclusive supplier of stator and rotor assemblies of Huawei automobile drive motors, will fully and definitely benefit from the continuous volume of relevant supporting models, and the revenue scale and profit margin are expected to increase rapidly.
The value of bicycles has increased to 5000 yuan, expanding and deeply binding BYD, new power car companies and other new projects continue to land. The company has extended from the early supply of stator and rotor cores for driving motors to the supply of stator and rotor assemblies, increasing the value of single motor from 500,800 yuan to 2300-3000 yuan, and dual-motor models to about 5000 yuan. The company 2Q22 announced that it became a batch supplier of BYD's stator and rotor business, and the amount of the first designated project reached 229 million yuan. With the increase of the openness of BYD's supply chain, the company as a new supplier is expected to get a rapid increase in its share. In addition, the company's business in ideal, XPeng Inc., NIO Inc. and other new forces continue to land, and through United Microelectronics Corp, Bosch, Schaeffler and other head Tier1 to further expand motor stator and rotor assembly business. We believe that with the simultaneous rise of the number of Xintuo customers and the sales of supporting models, the company's new energy electric drive business will grow rapidly, with high certainty and high flexibility.
Set up a new company in Ningde, Fujian, to expand new business. Based on strategic planning and actual business needs, Sun Company has set up a wholly-owned subsidiary with its own capital of 30 million yuan in Ningde City, Fujian Province.
We believe that this layout is the technical realization of the company's advantages in the field of metal stamping process and die for many years, and carries out the capacity layout around the core customers to further expand the new energy vehicle business. the new business is expected to become the second performance growth curve after the relay drive business.
Profit forecast and valuation
Considering the development of electric drive business and the landing of the company's new business, we maintain the company's net profit of RMB 236,000,000 in 2023, with the current share price corresponding to 31.0 times / 24.1 times earnings. We maintain an outperform industry rating and maintain a target price of 26.2 yuan, corresponding to a price-to-earnings ratio of 45.0 times 2023 to 2023, which is 44.7% higher than the current stock price.
Risk
The expansion of new energy business is not as expected and the cost control is not as expected.