Bafang shares is the leader of electric bicycle motor in the world, and its overseas layout has a solid foundation. Bafang Co., Ltd. is the largest electric bicycle motor supplier in China, deeply ploughing the field of electric bikes for 20 years, and the global layout dominated by European and American markets is mature. Then gradually cut into the domestic market and the traditional electric vehicle motor market, and with the help of technical advantages to develop new business, has formed a "electric bicycle motor + integrated wheel motor + kit + battery" full product pedigree, a complete set of solutions to improve the core competitiveness. The revenue / return net profit CAGR of 2015-2022 is 39.8%, 43.4%, 43.4%, 2023Q1,-40.72%, 74.06%, respectively. The performance is under pressure in the short term, and the long-term development prospect remains unchanged.
Electric bicycle motor: low penetration in Europe and the United States, broad market, company layout, technology, products, gross margin and cost advantages. 1) overseas prospects are promising: there is still demand in Europe and the United States, and the penetration rate of the Japanese market is over 50%. We expect the market size of Europe and the United States to exceed 10 billion yuan in 2025, of which the European / American intermediate motor market will reach 681,500 million yuan and the hub motor market will reach 14.9 billion yuan.
The company has a deep layout of the European, American and Japanese markets, with subsidiaries in the Netherlands, Poland, the United States and Japan. 2) leading technology: the company specializes in electric bicycle motor business, torque sensor and other technologies have high barriers, is one of the few enterprises in the world to master mass production technology. 3) complete products: the company has a full range of products such as motors, batteries, sensors and kits, which can provide customers with complete solutions for electric bikes with strong service ability and high customer stickiness, which is conducive to tapping potential customers. 4) High gross margin and low cost: compared with foreign capital and foreign enterprises, the company is expected to continue to replace foreign capital under the premise of ensuring performance and less than half of its price; compared with domestic capital, the company has dual advantages in brand and technology. High bargaining power brings high unit price and high gross profit, and strong profitability. Due to the smoothness of its output, the demand of mid-set motors is growing faster. We estimate that the revenue of mid-home motors will be about 12% CAGR in 2022-2025.
Electric two-wheeled motor: "New GB + product upgrade iteration" to promote the demand for exchange, high performance-to-price ratio helps to increase market share. 1) New national standard, upgrade iteration: the implementation of the "Safety Technical Specification for Electric Bicycle", the development of high-end, lithium electrification and intelligence of superimposed electric bicycle products, and the arrival of new product launch and purchase trend. China's electric two-wheeled vehicle sales CAGR was 11% from 2019 to 2022.
2) High performance-to-price ratio and low gross profit margin: the company's domestic products are mainly cost-effective and quickly open the market. The gross profit margin of 2021 Universe motor is 4.10% and 5.31% respectively in 2022, but the market share from 2020 to 2022 is 0.16%, 4.85% and 8.25%. We expect that with the expansion and stabilization of the channel, the market share will continue to increase, and scale effect will lead to the improvement of gross profit margin.
Profit forecast and investment rating: the company is the leading company of electric bicycle motor in the world, with in-depth overseas layout, international leading technology, complete product range, actively opening up the domestic market and more room for growth. We estimate that the company's homing net profit from 2023 to 2025 is RMB 671 million respectively, which is-26% and 38% respectively over the same period last year, and the corresponding PE is twice as much as that in 26-20-15. Considering that the company's motor incremental market is vast and the supporting products are expected to rise in volume and price, the coverage is given the "overweight" rating for the first time.
Risk hints: the risk of friction in international trade, higher prices of raw materials than expected, and relatively concentrated downstream customers