Leading the way in precision structural components for lithium batteries, the scale continues to expand. The company was founded in 1996, switched to automotive lithium battery structural parts in 2007, and has now become a leading global lithium battery precision structural parts company. Benefiting from the continuous increase in downstream demand and the continuous expansion of the company's scale, it has now formed a production capacity layout with 13 domestic production bases plus 3 overseas production bases.
The industry space is large, and the competitive pattern is relatively stable. Structural components are an important component of lithium batteries, affecting the safety and consistency of batteries. The product certification cycle is long, supplier replacement costs are high, cooperation with battery manufacturers is stable, and customer stickiness is high. According to statistics from third party agencies, in 2022, Kodaly's market share of square structural parts is about 36.4%, and the market share of cylindrical battery structural parts is about 9.4%. We expect the global structural parts market to exceed 60 billion yuan by 2025.
Cost control is excellent, and there is great potential for overseas growth. The company has three main advantages: 1) Technical advantages: The company has many years of experience in the development and production of lithium battery structural components, leading the product industry. 2) Customer advantages: The company's customers include world-renowned power battery manufacturers such as Ningde Times, China Airlines, LG, and Panasonic, and has been the largest supplier of structural components in the Ningde Era for many years. In addition, the company has continuously signed large-scale procurement contracts with overseas battery manufacturers such as Northvolt, ACC, and Morrow, and since 2020, it has successively built production capacity in Germany, Hungary and Sweden to support overseas customers, serving the world as overseas production capacity is gradually released. 3) Cost advantage: The structural parts industry accounts for a large share of fixed asset investment, and the scale effect is obvious. The company uses automated production lines to improve production efficiency and reduce labor costs. The share of manufacturing costs in costs is significantly lower than the industry average, and per capita income generation is higher than the industry average, which has a clear cost advantage.
Investment advice: We believe that as a leading lithium battery structural component company, the company has an excellent customer structure and stable profitability. At the same time, considering that the overseas market has huge room for future growth and 4,680 large cylindrical batteries can be expected, the company's net profit for 2023-2025 is 11.52/12.74/1,453 billion yuan, respectively. The corresponding PE is 17.1/15.4/13.5, respectively, covered for the first time, giving a “buy-A” rating.
Risk warning: macroeconomic fluctuations and industrial policy changes; rising raw material prices; increased depreciation of fixed assets; technology research and development risks; production capacity release falling short of expectations; overseas market expansion falling short of expectations; other force majeure factors, etc.