Key points of investment
The company's performance has entered the cash out period, and the charging pile business is growing rapidly
In the first quarter of 2024, the company achieved revenue of 860 million yuan, +22.2% year-on-year, and net profit to mother of 120 million yuan, +73.3% year-on-year. The company's net profit margin reached 14.5%, an increase of 4.3 percentage points over the previous year; among them, the digital energy business (including charging piles and charging cloud service products) achieved revenue of 160 million yuan, +103.3% over the same period last year, accounting for 18.5%.
The number of charging piles in the US is still low, and the potential elasticity of public DC piles in the US lags behind China and Europe. According to the IEA, the US public AC pile stock in 2023 is about 100,000 units (China and Europe are 104 and 640,000 respectively), and the stock of public DC piles is about 1.2 and 110,000 units respectively. The ratio of public AC piles is about 2.3 and 2.0 times that of China and Europe, respectively. Public DC piles are 6.6 and 1.3 times that of China and Europe, respectively. If you refer to the stable value of 20 DC piles in China in recent years, Public DC piles in the US still have relatively high potential elasticity.
The number of trams in the US can still double. According to S&P Global Mobility, the number of US trams is 1.9 million in October 2022, and will reach 11.3 million in 2030, with room for nearly 5 times improvement. Survey data shows that at the same time, insufficient charging facilities are still an important concern for car owners to buy trams. More than half of fuel truck owners think that using tram charging stations is not enough. In a context where supporting facilities have not been followed up, the US government issued the NEVI Act to subsidize the construction of charging facilities with 7.5 billion US dollars. The subsidy is about to be implemented. Charging pile expenses are expected to be ahead of the penetration of tram consumption, and demand from various charging pile purchasers may accelerate.
The company's in-depth product and market layout is expected to continue to benefit from the company's launch of a series of products such as high-power overcharging piles, small DC piles, commercial AC piles, etc., covering a power range of 20-640KW. At the same time, it also launched three major cloud service products: charging pile operation platform, operation and maintenance platform, and app to create an integrated new energy ecosystem for vehicles, piles, and networks. The company's factories and warehouses in the US have been built and put into use, which can meet the needs of customers seeking government subsidies and effectively reduce the impact of factors such as tariffs and transportation costs. At the same time, the company is gradually transferring shares in its subsidiary Cybersecurity Technology to develop the main automobile-related business more firmly and efficiently.
Profit forecast and investment rating: We believe that the company's traditional automotive aftermarket business performance is steady, and the charging pile business is expected to grow rapidly in overseas markets during the expansion period with its own accumulation and become the company's second curve. Therefore, we adjusted the company's net profit forecast for 2024 to $520 million, and predicted that the company's net profit for 2025/2026 would be 66/ 8.4 million yuan, respectively. As of the close of April 30, 2024, the company's corresponding PE for 2024-2026 would be 23.4/18.3/14.5 times, respectively, maintaining a “buy” rating.
Risk warning: US electric vehicle penetration falls short of expectations; US market demand falls short of expectations; policy support falls short of expectations; company product expansion falls short of expectations