Leading domestic lead-acid batteries, overseas sales and low-voltage lithium batteries contribute new volume, and dividends are steadily increasing. Low-voltage batteries with a safety margin are indispensable in the automotive front-end market. Since lead-acid batteries need to be replaced regularly, the aftermarket has certain consumer properties. The company is a leading domestic low-voltage lead-acid battery. In 2022, Camel Co., Ltd. had a 49% market share of domestic front assembly equipment and a 30% market share of rear assembly replacement. Looking at future growth: (1) Overseas markets: In 2023, the company established an international division, and currently has an overseas production capacity of 5 million KVAH. We estimate that the overseas aftermarket space is 4-5 times that of the domestic market, which is expected to become the company's second growth curve; (2) low-voltage lithium battery front-end: a total of 35 projects were targeted in 2023, and the company's low-voltage lithium battery business is expected to quickly reverse losses as downstream models are launched; (3) low-voltage lead-acid aftermarket: has significant channel advantages in China, and the market share is expected to increase year by year. In 2023, the company's dividend rate was 55%, the dividend rate was 3.4%, and the dividend rate continued to increase.

We expect the company's 2024-2026 revenue to be 16.166/18.367/20.596 billion yuan, respectively, and net profit to mother of 0.804/1.09/1.405 billion yuan, corresponding to the current PE price of 10.6, 7.8, and 6.0 times. The company's 2025 PE and PEG are lower than the valuation average of comparable companies, maintaining a “buy” rating.

Aftermarket: The domestic market has a first-mover advantage in sinking channels, supporting the recycled lead business to ensure stable supply, and the company has built a national channel network of 3,300+ service providers and 0.11 million terminal vendors. The market share increased from 25% in 2019 to 30% in 2022. At the same time, with the sales network, a “purchase and sale integration” has been created, and a 1:1 combination between a lead-acid battery factory and a recycled lead factory has basically been formed.

Overseas market: International business management structure was restructured and overseas localized production capacity was put into operation. Overseas business grew rapidly. Camel Co., Ltd. established an international division and set up overseas key regional offices in 2023. Currently, the total overseas production capacity is about 5 million KVAH. Localized sales and localized production capacity have significantly improved delivery capacity and demand response speed. From January to May 2024, overseas sales increased by more than 80% year-on-year, and the company's internationalization strategy progressed smoothly.

The dividend rate has been rising steadily: the current dividend rate is 3.4%

The company's dividend ratio increased from 31% in 2021 to 55% in 2023, and the dividend ratio increased from 1.4% in 2021 to 3.4% in 2023. The dividend ratio and dividend rate continued to increase.

Risk warning: technological change risk; policy risk; market competition risk; raw material price fluctuation risk.