Key points of investment:

The volume and price of consumer electronics have risen sharply, and downstream applications have ranged from 1 to N. 1) Mobile phone chargers are expected to rise in volume and price. Volume increase: According to an announcement from Aohai Technology, since 2021, its mobile phone chargers have accounted for more than 15% of the global market, ranking first in the world, and are expected to benefit from the recovery of consumer electronics and an increase in market share. Price increase: The fast charging power upgrade is expected to boost the company's product ASP. According to the company announcement, in the first three quarters of 2023, the penetration rate of the company's fast charging over 60W increased to more than 24% (1Q23 penetration rate was 19% +), and the increase in the share of high-power products drove the ASP for mobile phone chargers to rise from 7.3 yuan in 2018 to 16.6 yuan in 2022. 2) The charging and storage business is moving from mobile phones to the full ecosystem of IoT/independent brands and ODM/PC/power tools. Benefiting from trends such as the Internet of Everything, cordless power tools, the popularity of outdoor camping, and the development of third-party charging brands, the company has successfully expanded its business in the fields of IoT power supplies, independent brands, outdoor power supplies, power tool power supplies, and data power supplies.

Holding Zhixin Control, enters the Tier 1 circuit for new energy vehicle controllers. In April 2022, Aohai Technology Holdings, controlled by Zhixin, officially entered the NEV race track. Up to now, the company has been selected by many suppliers such as Dongfeng, Geely, SAIC, Great Wall, Gaohe, Honda, and Nissan Hehongqi. The core business of Zhixin Control is new energy vehicle control system products. It has more than ten years of development and mass production experience in the fields of vehicle controllers (VCU), motor controllers (MCU), and battery management systems (BMS), etc., and continues to increase investment in power domain control (PDCU), regional domain control (ZCU), and vehicle domain control (VDC).

The digital energy business volume has been replaced by domestic production. Products include photovoltaic inverters, balcony photovoltaics, energy storage systems, charging stations, and server power supplies. 1) According to the 2022 annual report, the company has begun development of photovoltaic/energy storage inverters for household and industrial use (a series of single-phase and three-phase products in the 6 kW and 12 kW power ranges) and household optical storage and charging systems, which will mainly target the international market.

2) The company is actively developing business in the field of data center server power supplies and developing cost-effective, high-reliability, wide-range and high-efficiency server power supplies. The company has now completed mass production development of mainstream server power supplies (1300W/1600W) and 1600W server backplane power supplies. As of 2022, the company's CRPS server power supplies have been serialized and mass-produced and supplied, and the supporting PDB server backplane power supplies have also been supplied in batches.

Investment analysis opinion: First coverage, giving the company a “buy” rating. The forecast for 2023-2025 is revenue of 5.4,6.8/86 billion yuan, and net profit of 5.1, 6.7 billion yuan, and 890 million yuan. Referring to the 2024 average PE valuation of comparable companies, Aohai Technology was given 25X PE. Compared with the current 56% increase, the company was given a “buy” rating.

Risk warning: 1. Risk of increased market competition; 2. Risk of raw material price fluctuations; 3. Risk of exchange rate fluctuations.