Matters:
According to Outan Financial Media (Ganzhou Economic Development Zone Finance Media Center), Funeng Technology (Ganzhou) Co., Ltd. held a grand product launch ceremony in the Ganzhou Economic and Technological Development Zone on May 20, marking that the company has ushered in a new development milestone.
Commentary:
Gigafactories dramatically improve production efficiency and reduce costs. In August 2022, Funeng Technology's Ganzhou new energy battery project with an annual output of 30 GWH was officially registered. The project is planned to be completed in two stages. The first phase will generate an annual production capacity of 18 GWh of new energy batteries, and the second phase of the project plans to increase the production capacity by 12 GWh.
Funeng Technology's Ganzhou New Energy Base is the company's first gigafactory to enter the TWh era. The company's production system, manufacturing process and management processes adapt to the needs of the TWh era, which will greatly improve production efficiency and reduce costs.
Technology research and innovation continue to advance and are widely recognized by the market. Through continuous technology research and development, the company has successfully developed a variety of new energy battery products with international competitiveness; the company's products are also used in various markets such as new energy vehicles, energy storage, power tools, and drones. At the same time, the delivery of the world's first mass production model of sodium batteries marks Funeng Technology's leading position in the field of new battery technology.
Combining core customers, SPS Battery builds the company's competitive advantage. The company is a leader in ternary soft pack batteries and a core supplier of Mercedes-Benz electric vehicles. At the same time, Mercedes-Benz holds 2.63% of the company's shares and is the company's 8th largest shareholder. The new power battery solution launched by the company, the SPS (Super Pouch Solution) battery, uses a horizontal arrangement design with large soft pack batteries to effectively reduce the cost of structural components and improve the volume utilization rate of soft pack batteries.
Investment advice: Due to the sharp increase in raw material prices, 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 -1.73/2.98/781 billion yuan. The current market value corresponds to PE -80/47/18 times, and the corresponding PS is 0.7/0.6/0.5 times, respectively. Referring to comparable company valuations, the corresponding target price was 13.7 yuan, maintaining the “recommended” rating.
Risk warning: Production capacity expansion falls short of expectations, orders from major customers fall short of expectations, new business expansion falls short of expectations, increased industry competition, changes in technology routes, changes in industrial policies, etc.