The company is the world's leading supplier of motor products. Wolong Group was founded in 1984 as the world's leading manufacturer of motors and drive solutions. The company is led by technological innovation and digital empowerment, and is committed to providing safe, efficient, intelligent and green motor power system solutions to users around the world. In 1985, the company produced its first product, the JW series motor. The company has carried out a series of acquisitions since 2002, continuously enriching its product range.
As favorable low-altitude policies continue at the national and local levels, China's low-altitude economy is expected to develop rapidly. According to CCD consultants, China's low-altitude economy reached 505.95 billion yuan in 2023, an increase of 33.8% over the previous year. Of the large-scale contribution of China's low-altitude economy in 2023, low-altitude aircraft manufacturing and low-altitude operation services contributed nearly 55%, while indirect and primer-induced economic activities around supply chains, production services, consumption, and transportation contributed nearly 40%. According to CCID's consultant's forecast, China's low-altitude economy is expected to exceed trillion yuan by 2026, reaching 10644.6 billion yuan.
Wolong began laying out the electric aviation business in 2019, focusing on the development of aeronautical electric drive systems. According to the “3+1" strategic guidelines, the company has now formed a series of products with 3 high-power levels of “small, medium and large” and 1 airworthiness standard for civil aviation. At the same time, the company actively participated in the formulation of airworthiness standards for electric propulsion systems, which helped establish airworthiness certification barriers.
In addition, the company has established strategic cooperation with a number of aircraft mainframes and has made positive progress with product developers. The company has a card position advantage in aero motor support.
The Chinese motor market has a high localization rate, and Wolong has the largest share. In 2023, in the overall Chinese motor market, domestic companies will account for 94% of the market share, and foreign companies will account for 6% of the market share. In the Chinese motor market in 2023, TOP10 motor companies occupied about 24% of the market share. Among them, Wolong has the highest market share, with a market share of about 6.2%, followed by Ocean Electric 4.4%, Shanghai Electric 2.9%, and Huichuan Technology 2.8%. Among foreign motor manufacturers, only Siemens entered the TOP10, with a market share of about 1.4%. In addition, among the TOP10, Wolong, Huichuan, and Anhui Electric Power is growing rapidly.
Wolong's industrial motor sales have been growing steadily, and unit prices have increased in recent years. In 2020-2023, the company's industrial motor sales increased from 27.44 million KW to 34.2 million KW, and the year-on-year growth rate showed an upward trend. The year-on-year growth rate was 3.5%, 6.1%, and 13.0% respectively in 2021-2023. In 2020-2023, the company's industrial motor revenue increased from 7.40 billion yuan to 9.65 billion yuan, reflected in unit prices. In 2020-2023, it was 269.6, 277.7, 291.0, and 283.5 yuan/KW.
First coverage, giving a “buy” rating. We expect the company's revenue in 2024-2026 to be 169.5/184.7/20.6 billion yuan, with year-on-year growth rates of 8.9%/9.0%/9.2%, respectively; net profit to mother of 11.3/13.3/1.51 billion yuan, with year-on-year growth rates of 112.7%/17.7%/14.1%, respectively. Considering that the company's traditional main business continues to grow steadily, aeromechanics is expected to establish high technical, airworthiness certification and customer barriers, and the company's valuation is lower than the industry average, giving it a “buy” rating for the first time.
Risk warning: risk of fluctuations in industries related to the low-altitude economy; risk of changes in industrial policy; risk of increased industry competition; risk of leakage of core technology and core processes; risk of untimely update of the use of information data.