1. From a comparative perspective between China and foreign countries, charging stations are electrified infrastructure, and the US market still has a lot of room for improvement
Supporting construction of charging stations in Europe and the US lags behind the growth of trams, and there is an urgent need for public charging pile construction. According to data disclosed by the IEA, the ratio of NEV piles in China in 2022 was 8.89, and this data has continued to revolve around 8 since '19. We believe this is the result of a relatively balanced supply and demand relationship between charging stations and electric vehicles in China. The ratio of US and European car piles is 23.13/15.83, respectively, and the US data has maintained an upward trend since 20 years. We believe that at present, Europe and the US, as the main market for new energy vehicles, are far behind the growth pace of trams, and there is an urgent need for charging pile construction.
2. Market concerns: Does weakening tram sales in the US market inhibit demand for charging piles?
Our conclusion is that the current economic inflection point for US charging piles is coming with superimposed subsidy policy support, and charging piles are expected to usher in an inflection point in growth.
We believe that charging stations are necessary infrastructure for the popularization of electric trains, and that demand should be placed ahead of tram sales. Looking at data from the three major markets of China, the US, and Europe, the growth rate of demand for charging piles will be affected by the triple impact of the economy of their own operations, product maturity, and policy subsidies. Here, we take the comparison of the Chinese and US markets as an example. We believe that the current US charging pile market is similar to the Chinese market in '18, and is expected to accelerate the growth of charging piles in the context of increased penetration rate of tram ownership and combined with policy support.
Taking the US market as an example, we believe that tram sales have weakened over the past 24 years due to inadequate infrastructure construction where charging stations were supposed to be built. According to California NewCar Dealers Association (California NewCar Dealers Association) data, California registered 8,9993 electric light passenger cars in Q4 2023, down 10% from Q3. US interstate highways are vast and government subsidies are relatively conservative, and charging network construction is lagging behind. However, considering the major trend of electrification, the need to build charging stations is prominent.
Judging from the structure of public charging piles, there is still a lot of room for improvement in the share of DC fast charging piles in the European and American markets. In '22, the US accounted for only 22% of fast charging, and Europe only accounted for 13% of fast charging, while China had reached 43% in the same period. At the same time, taking the US as an example, considering that NEVI Act subsidies mainly target roadside charging scenarios, we determine that DC fast charging is expected to become a core component of subsequent growth in the US market.
Profit forecast and investment advice: Based on the company's annual report, considering that the company's charging pile industry is still in the promotion stage. With the improvement of the new energy business system and its scale effect, the company is expected to have revenue of 42.82/54.28/6.235 billion yuan in 2024-2026, and net profit to mother of 5.25/7.80/913 billion yuan, maintaining a “buy” rating.
Risk warning: Demand for charging piles in the European and American markets has fallen short of expectations, the development of the new energy business falls short of expectations, risk of exchange rate fluctuations, and policy risks