The Zhitong Finance app learned that Bank of China Securities released a research report saying that the electrification of automobiles has driven a high demand for charging, maintaining the industry's strong rating over the market. Leading companies with scale advantages, technical advantages, or the ability to make their own parts in the entire pile chain are expected to achieve a lower cost and higher cost performance ratio and enjoy the growth dividends of overseas markets. At the same time, there is a technical threshold in the module process. High power and high efficiency are the future development direction, and leading companies are relatively leading in high power technology. Furthermore, the Matthew effect in the operation process is remarkable. As market space opens up and economic efficiency improves, leading companies are expected to be the first to benefit.

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The main views of BOC Securities are as follows:

High growth in sales of new energy vehicles drives demand for charging stations:

With the rapid increase in sales of new energy vehicles, demand for charging stations is growing rapidly. According to data released by the China Charging Union, the number of charging stations owned in China increased from 201,000 in 2016 to 5.21 million in 2022, with an average compound annual growth rate of 72%. According to IEA data, the number of public and private charging stations in the US increased from 45,000 in 2016 to 144,000 in 2022, with an average annual compound growth rate of 21.3%, while the number of charging stations in Europe increased from 77,000 to 479,000, with an average annual compound growth rate of 35.6%. At present, the vehicle pile ratio in China is showing a downward trend, but there is still a large gap. The charging infrastructure construction in Europe and the US is relatively backward, and there is plenty of room for development.

The leader in the whole chain is Hengqiang. Leading companies have certification, cost, and channel advantages:

As a product integration and sales process, the entire charging pile process has a relatively low technical threshold, and market competition is fierce; among them, leading companies with scale advantages, technical advantages, or the ability to make their own components are expected to achieve a lower cost and higher cost performance ratio, and maintain relatively high profitability in the competition. Furthermore, due to differences in global charging pile design and certification standards, and charging pile sales requirements for channels and services, leading companies are expected to take the lead in breaking through certification barriers in overseas markets with their financial advantages, gradually increasing their penetration rate in overseas markets through global sales channel layout, and forming differentiated competition.

There is a technical threshold in the module process. High power and high efficiency are the future development direction:

As the core component of the charging pile, the charging module has high technical barriers, and the competitive pattern is relatively concentrated. With the advent of the ultra-fast charging era, the power density of charging modules of the same size has been gradually upgraded, and leading companies such as Infineon, Yonglian, Tonghe Technology, and Premium Green Energy are relatively ahead in high-power technology. As a component, the charging module mainly uses the 2B model. The development of leading domestic companies in the global market is clearly faster than the whole process. Most first-tier enterprises have already passed certification and entered the supply chain of overseas piles. In the future, it is expected that they will break the limitations of domestic market demand and achieve a higher revenue scale.

The economic efficiency of the operation process has improved, and the profits of leading companies are expected to be the first to improve:

The barriers in the operation process are high, and the Matthew effect is remarkable. Benefiting from the increase in the number of new energy vehicles and the charging volume of bicycles, and the rapid growth in operating market space, we expect the service fee market space to exceed 10 billion dollars in 2025, with an average compound annual growth rate of about 56% from 2022-2025. According to our estimates, operators have crossed the break-even point and achieved profit at this stage. Operator profits are expected to continue to improve as service fees tend to be marketed and charging pile utilization increases in the context of automobile electrification.

Risk warning: The growth rate of new energy vehicles falls short of expectations, the strength of new energy vehicle products falls short of expectations, demand for charging piles falls short of expectations, competition for charging piles exceeds expectations, and the risk of international trade friction.