The millionth set of HEV power batteries was successfully launched, and the domestic and overseas market size is expected to improve. On June 3, 2024, Sunwoda Powers' millionth HEV hybrid vehicle battery product was completed at Sunwoda's Huizhou base.
Sunwoda Power's installed capacity of power batteries for HEV hybrid vehicles reached a new high in 2023, becoming the largest supplier of HEV hybrid batteries in China for three consecutive years. The production and sales volume of new energy vehicles in China in 2023 is close to 10 million units, accounting for 31.6% of the national automobile sales market in 2023. HEV hybrid models are a better solution to meet the demand for green vehicles in the current situation where battery technology and energy supplementation facilities are insufficient.
The 2023 HEV model achieved sales of 861,000 units in China, and market demand is expected to continue to grow in 2024. Brands such as Toyota, Hongqi, and Honda are all launching a new generation of HEV hybrid systems. HEV models are the main models in overseas markets, and promotion of pure electric models is slowing down in the 2024 US election year, and overseas markets are still dominated by HEVs. As the largest domestic supplier of HEV hybrid vehicle power batteries, Sunwoda Power is expected to gain a development advantage in HEV automotive products.
Deploy HEV batteries early to promote the development of BEV overcharging. Compared with BEVs and PHEVs, HEV bikes require less battery, generally 1-10kWh. HEV models convert kinetic energy into electricity through the car's own braking system. The requirements for battery capacity and energy density are lower, but the battery's shallow charge and discharge rate are higher. Sunwoda Power has now continued to iterate three generations of HEV high-power battery products, which have industry-leading high power performance and high durability. Currently, the company uses the technical advantages of HEV batteries to make efforts on overcharged racetracks. Thanks to the steady increase in the domestic new energy market and product competitiveness, 2023 became the first year of EV overcharging, and Sunwoda Power released flash battery 3.0 in April 2024. According to the forecast of the Yiou think tank, the market share of overcharged vehicles in China will increase from 3% in 2023 to 52.5% in 2030. Currently, the company's ultra-rechargeable batteries occupy a leading position in the market, and are expected to grow at a higher rate.
Investment advice: Affected by the sharp increase in raw material prices and increased competition in the power battery industry, the company's profitability was dragged down by inventory and increased competition in the battery industry. We lowered the 2024-2026 net profit forecast to 14.3/20.1/2.4 billion yuan. The current market value corresponds to PE 19/14/11 times, respectively. Referring to comparable company valuations, we gave 22x PE in 2024, corresponding to a target price of 17.0 yuan, maintaining a “strong push” rating.
Risk warning: Demand for overcharged products fell short of expectations, competition for power/energy storage batteries intensified, demand for HEV hybrid vehicles fell short of expectations, geopolitical risks, insufficient demand for consumer electronics, etc.