A leading global structural parts company, customers include mainstream battery manufacturers at home and abroad. The company's products are mainly divided into two categories: precision structural parts for lithium batteries and structural parts for automobiles. With its advanced technical level, high-quality production capacity, and efficient R&D and supply system, the company has attracted high-quality power battery customers at home and abroad. We have now established long-term and stable strategic partnerships with leading domestic manufacturers such as CATL, BYD, Everweft Lithium, Sunwoda, and Lishen, as well as well-known foreign customers such as Panasonic, LG, Northvolt, and Faurecia.
Global demand for lithium battery structural components is expected to maintain a relatively rapid growth rate. We estimate that the global demand for lithium batteries in 2023-2025 is 1271, 1624, and 2013 GWh, respectively. Considering that the industry faces the risk of increased competition as cell costs fall and energy density increases, and downstream demand slows, the value of structural components corresponding to a single GWH is expected to decline slightly by 5-10% each year, corresponding to the global lithium battery structural parts market size of 531, 645, and 75.9 billion yuan respectively from 2023-2025.
The competitive landscape is unique, and the market concentration is high. According to Gaogong lithium battery data, in the field of square battery structural components, Kodali's market share is close to 40%, far exceeding its peers. Other manufacturers generally have a market share of 10% or less.
In the field of cylindrical battery structural components, Kodaly ranked third, with a market share of about 10%. Since squares account for about 90% of the total demand for lithium batteries, it is estimated that Kodali's overall market share in battery structural components is still close to 40%.
The technical barriers to structural components of large cylindrical batteries are high, and Kodali has achieved batch supply to customers. Compared to 2170 cylindrical batteries, etc., 46 series large cylindrical batteries have higher battery capacity and output power, more stringent requirements for safety and current output devices, and require more parts. Furthermore, the product structure is more complicated, and the manufacturing process and manufacturing are more difficult. Kodali began developing large cylindrical structural parts in 2021. According to the exchange meeting information disclosed by the company, the company had a production capacity of 4680 structural parts in February 2022, and supplied them in batches to customers in October 2022.
Profit forecast, valuation and investment rating: The company's revenue for 2023-2025 is estimated to be RMB 10.09 billion, RMB 135.1, and RMB 16.15 billion, respectively, and realized net profit to mother of RMB 11.6, 1.42 and RMB 17.01 billion, respectively. According to the closing price on February 8, 2024, the average PE of comparable companies Slack, Zhenyu Technology, and Changying Precision in 2024 was 15 times; Kodali's net profit to mother in 2024 is estimated to be 1.42 billion yuan, which is 13 times the corresponding PE valuation, which is 13 times lower than the industry average. Considering that the company has leading market share and stable profitability in the lithium battery structural parts industry, coverage was given a “buy” rating for the first time.
Risk warning: the price of structural parts falls beyond expectations, the progress of new production capacity falls short of expectations, the risk of deviations in industry size estimates, and the risk of untimely updates to research and use information data.