The company is a pioneer in transforming the home appliance industry into new energy through mergers and acquisitions: the company was founded in 1997, and its main products are fully sealed piston compressor thermal protectors, starters, sealed terminals, and home appliance thermostats and motors. In 2021, the company entered the field of photovoltaic modules through acquisitions.
We believe that strong acquisition and integration capabilities are the key to the company's expansion. The company has its own standards and mature practical experience in selecting industry targets and subsequent integration.
The leading position of household appliance components is stable, and the industry is developing steadily: fully sealed piston compressors are expected to develop steadily in line with the demand for refrigerators and freezers. The company's market share of leading compressor parts, thermal protectors, starters, and sealed terminals has reached 30-40%. The compressor parts industry is mature and traditional. Related enterprises generally require external processing and production, leading to additional costs, while Xingshuai has excellent independent manufacturing capacity, sufficient production capacity, leading per capita output, and low labor costs. Second, compressor parts have many product specifications, strong customization, and careful customer certification. Xing Shuai has the advantage of customer stickiness. Finally, Star Shuai's industry-leading market share has created a scale effect. The three advantages are a guarantee for the company to stabilize its market position and increase its market share.
The new energy vehicle micromotor industry is vast, and the company's transformation is expected to usher in development opportunities: the amount of micromotors used in new energy vehicles is close to five times that of ordinary fuel vehicles. Micromotors for new energy vehicles will expand at an accelerated pace as the penetration rate of new energy vehicles increases, and is expected to exceed 100 billion dollars in 2025. The company's subsidiary, Zhejiang Special Electric, has entered the BYD supply chain. Although Zhejiang Special Electric is small in scale, the production management level of Zhejiang Special Electric has improved markedly, and it is expected to become a small but beautiful enterprise in the industry. After choosing a development direction, revenue and profitability are expected to grow as the scale increases.
New energy is a high-quality choice for improving the ceiling, and manufacturing power is the company's motivation: Starship acquired the module company Fuller New Energy to enter the photovoltaic industry in 2021. At the end of 2022, the module production capacity was 1.5 GW. Currently, it is building 2 GW of module production capacity, and plans to achieve 5GW production capacity in the shortest possible time. Xingshuai continues to develop component orders at home and abroad. The OEM model ensures stable profit for the company's components, and component performance is expected to grow with the release of production capacity. In November 2022, Fule New Energy signed an energy storage strategic cooperation agreement with Changfeng Intelligence, driven by the demand of overseas customers, and officially entered the energy storage market. If calculated according to the energy storage support ratio of overseas photovoltaic customer orders of 25%, corresponding to 225 MWh household storage demand, 440 million yuan in revenue, and 80 million yuan in net profit from the mother, the performance elasticity is impressive, and the energy storage business is expected to accelerate the growth of Star Shuai.
Investment suggestion: The company is a leading compressor parts company, and the transformation of new energy photostorage will usher in rapid growth in performance. In 2023-2025, the company expects to achieve revenue of 30.8/54.6/6.67 billion yuan and net profit of 21/32/4.0 billion yuan respectively. Combining relative valuations and absolute valuations, for the first time, we covered the buy-A investment rating given by Star Shuai. The 12-month target price is 19.35 yuan/share, corresponding to 12.5X PE in 2024.
Risk warning: risk of deterioration in the competitive pattern of the industry; risk of changes in national industrial policy; risk of deterioration in the international trade environment.