The acquisition of electrolytic copper foil equipment leader Hongtian technology, the transformation of new energy equipment track. The company was originally a manufacturer of drilling and production equipment for oil and gas resources, but in recent years, under the influence of comprehensive factors such as Sino-US relations, the original business performance has been under pressure. In 2022, the company changed its controlling shareholder and actual controller, gradually divested its original business assets and acquired a 51% stake in Hongtian Technology, and began to transform from a "traditional oil and gas equipment manufacturer" to a "new energy high-end equipment manufacturer." at present, the company already holds an 81% stake in Hongtian Technology. 2023H1 achieved revenue of 1.06 billion, year-on-year + 48%; home net profit of 50 million, year-on-year + 272%, performance returned to the high-speed growth channel.

Downstream expansion overlay equipment localization replacement, equipment manufacturers are expected to fully benefit. The production process of lithium copper foil is divided into copper dissolving, raw foil, surface treatment and slitting, in which raw foil is the core of copper foil production, which mainly involves cathode roller (high technical barrier), anode plate (high value consumables) and other equipment. At present, the cathode rollers of domestic copper foil manufacturers mainly come from Japanese imports and domestic supplies. Due to the large number of orders from overseas equipment manufacturers, slow production expansion and long delivery cycle, there is a huge space for domestic equipment replacement under tight supply and demand. The anode plate belongs to the production of consumables, due to the replacement frequency, high unit price, has a considerable market scale. We estimate that the global market size of major equipment / consumables for lithium copper foil in 2025 is about 7.49 billion yuan.

Forward-looking layout of composite fluid collector equipment to create the company's second growth pole. In April 2023, the company took the lead in releasing the country's first composite copper foil dry one-step equipment (vacuum magnetron sputtering all-in-one machine); in July, the equipment successfully passed customer verification and signed the first batch of 70 million orders with Hankou new materials; in September, the company won 184 million new orders from Node again with "vacuum magnetron sputtering all-in-one machine", "magnetron sputtering + evaporation machine" and "winding evaporation coating machine". At present, the company accelerates the landing of equipment orders by one-step method, which not only reflects the strong competitiveness of the composite fluid collector industry, but also defines the development direction of the future process route of the composite fluid collector industry. And the company is expected to rely on composite copper foil equipment and downstream leading customers of the high binding, to create a second growth curve.

Technology leads the replacement of domestic equipment, and capacity expansion ensures long-term growth. Hongtian Technology, a subsidiary of the company, as a leader in the field of domestic lithium copper foil equipment, fully introduced Japanese advanced technology and design concepts, realized the domestic replacement of electrolytic copper foil high-precision equipment, and led the industry in technical specifications. Benefiting from the rapid expansion of downstream customers, Hongtian Technology has full orders on hand, and the current order delivery has been scheduled to 2024.

At the same time, the company laid out two major new energy high-end equipment manufacturing projects, of which the Yancheng base is expected to put into production of 2023Q3. At present, the company's composite copper foil integrated machine equipment has achieved a breakthrough from 0 to 1, and the mass production of new composite aluminum foil equipment is imminent. with the successive landing of the company's composite fluid collector equipment orders and the completion of the Nantong base, the company's equipment capacity will be greatly expanded, which is expected to provide long-term growth space for the company's performance.

Profit forecast: the total revenue of the company from 2023 to 2025 is estimated to be 29.4%, 30.0%, 3.70 billion yuan respectively, an increase of 35%, 2%, 23%, and the net profit is 2.0%, 4.1%, 690 million yuan, respectively, an increase of 88%, 104%, 70%. Based on the closing price on October 16, 2023, the PE of Dawson shares from 2023 to 2025 is 30.6x/15.0/8.8x. Coverage for the first time, with a "buy" rating.

Risk hint: the development of composite copper foil industrialization is not as expected, the progress of new product promotion is not as expected, the model calculates the risk, and the progress of business sale is not as expected.