Key points of investment:
Relying on Tsinghua's cultivation, we attach great importance to independent research and development capabilities, and become a pioneer hydrogen fuel cell enterprise. The company was founded in 2012 and has independent core intellectual property rights. It is one of the few domestic enterprises with the capacity to mass-produce fuel cell engine systems and electric stacks. After nearly ten years of technology accumulation, the company has formed a vertically integrated product and service system with autonomous hydrogen fuel cell engines as the core, including bipolar plates, electric stacks, vehicle controllers, intelligent DC/DC, hydrogen systems, test equipment, and fuel cell laboratory solutions. Benefiting from the development of China's hydrogen fuel cell industry, the company has entered the stage of large-scale industrialization of technology. With the further development of the hydrogen energy industry, the hydrogen fuel cell industry will directly benefit.
Hydrogen energy industry policies are introduced frequently to ensure the rapid development of the hydrogen fuel cell industry. From an international perspective, hydrogen energy has now become the new focus of the international agenda. China's hydrogen energy industry has been on the fast track since the 13th Five-Year Plan, and local governments have frequently introduced policies and plans related to the hydrogen energy industry. Hydrogen fuel cells are a bridge for hydrogen energy applications. The good and stable development of the hydrogen energy industry is an important support for the rapid development of hydrogen fuel cells. At the end of August 2021, the first batch of demonstration city clusters was officially launched. Yihuatong has been deeply involved in the Beijing-Tianjin-Wing regional market for many years and is the most representative fuel cell manufacturer in the Beijing-Tianjin-Wing region. As the first batch of hydrogen fuel cell vehicle demonstration city clusters, Beijing-Tianjin Wing will ensure that the company continues to benefit for four years. In addition, Yihuatong has layouts in other model city clusters.
The technical layout is deepened from the outside to the inside to get rid of import dependency. The company has now formed a “system-stack-membrane electrode” core business layout. From a system perspective, the company's products are all independently developed, and the core technical indicators of the products are ahead of other manufacturers, and the core materials have escaped import dependency; judging from electric reactors, electric stacks are the “heart” of fuel cell systems, and the company's subsidiary Shenli Technology is a benchmark enterprise in the electric stack industry, and the technologies are all independently developed; from the perspective of membrane electrodes, membrane electrodes are an important component of electric reactors. In June 2019, Yihuatong and Dongyue Group jointly founded Ehydrogen Technology, a representative domestic membrane electrode company.
The upstream hydrogen energy industry layout is expected to reach the trillion-level market for fuel cells and 400 billion for hydrogen energy equipment by 2050. According to estimates based on the “China Hydrogen Energy Industry Development Report 2020”, it is estimated that in 2025/2030/2050, China's hydrogen fuel cell vehicle fleet will reach 4.9/46.7/30 million vehicles, the hydrogen fuel cell market will reach 50 billion in 2030, and the hydrogen fuel cell market will exceed trillion yuan by 2050. Furthermore, in August 2021, Yihuatong signed a strategic agreement with Mizuki Mingtuo to develop long-term cooperation in the hydrogen energy industry. It will carry out research and development of key hydrogen energy technologies and core equipment, marking the further expansion of Yihuatong into the field of hydrogen energy equipment.
Profit forecast and valuation: We expect the company's net profit to be -2.39, -1.57, and 0.18 billion yuan in 2023-2025, corresponding EPS of -1.44, -0.95, and 0.11 yuan/share, respectively. Currently, the stock price corresponding to PE is valued at -28, -42, and 367 times, respectively. Combining the PB and PS valuation methods, we gave the company a 5 times PS valuation in 2024, with a target price of 47.03 yuan. For the first time, coverage gave it an “gain” rating.
Risk warning: 1) The pace of policy is lower than expected; 2) technological breakthroughs in manufacturing, storage, transportation, and fuel cell core components are lower than expected; 3) downstream demand for hydrogen energy is lower than expected.