The company is mainly engaged in the three major businesses of lithium batteries, LED chips and metal logistics distribution, and has long adhered to the business philosophy of “developing high-end products and serving high-end customers”. Jiangsu Tianpeng Power Co., Ltd., a wholly-owned subsidiary, is a high-tech enterprise with deep technology accumulation in the field of cylindrical batteries. It is in a leading position in the industry, especially in the field of lithium battery applications for multiplier power tools. It is the main supplier of small power batteries that have entered the supply chain of the world's TOP4 international power tool brands. The company's LED business is mainly engaged in the development and manufacture of LED products. It has a complete industrial chain from sapphire substrate cutting and polishing, PSS, epitaxial film, LED chips, and CSP packaging, and is one of the major LED chip suppliers in China. The company has more than 20 holding subsidiaries located in Malaysia, South China and East China.

The lithium battery business provides growth momentum and is a major supplier of small power batteries. Over the years, through continuous investment, Tianpeng Power has leading R&D and manufacturing capabilities for high-rate small-power lithium batteries. In the first half of 2024, as major overseas customers of lithium batteries for power tools basically ended their inventory removal, related procurement began to gradually resume, and the scale of orders received by the company increased. At the same time, the company is actively expanding the smart mobility market other than electric tools and smart homes, and is focusing on the future to lay out more diverse application scenarios. The lithium battery business is showing a year-on-year growth trend. The company firmly promotes the global strategy and actively promotes the construction of lithium battery investment projects in Malaysia. The Malaysian project plant was capped in May 2024, and the project progress is in line with expectations.

The competitiveness of LED high-end products continues to improve. The company's Silver Mirror high-power flip chip products were favored by customers after their launch; miniLED and other backlight chip fields successfully entered the supply system of major global leading customers and gained leading market share; ultra-high light-efficiency flip chips for plant lighting applications received supporting orders from a major international manufacturer; the company's high-power flip chips, which actively laid out the automotive lighting application market, were also shipped in batches; it took the lead in launching CSP special packaging products and promoted them to the market; and promoted micro LED product development projects.

Continuously enhance overall competitiveness. In terms of lithium battery business, the company continues to lead equipment innovation in the domestic industry. 200PPM and 300PPM fully automatic production lines were introduced for the first time in China. The company actively creates digital manufacturing plants. The product manufacturing process is highly automated and intelligent, and the level of efficiency and quality control has reached the world's advanced level in the field of cylindrical segmentation. In the LED business, through continuous investment in R&D, the company has achieved industry-leading product performance in application fields such as backlighting and high-efficiency lighting, and has formed a competitive high-end product system.

Profit forecast, valuation and rating: According to the company's announcement, the company's lithium battery business is affected by factors such as overseas inflation and inventory removal of international brand tools, etc., and procurement recovery from major customers is slow. We lowered the company's net profit forecast for 2024-2025 to 0.422/0.572 billion yuan (by 18.7% and 22.9%), and the new company's net profit forecast for 2026 is 0.636 billion yuan, corresponding to PE24/18/16X. We are optimistic about the development prospects of the company's lithium battery and LED business. After downstream demand picks up, the company's net profit level is expected to recover quickly, have sufficient momentum for long-term growth, and maintain a “buy” rating.

Risk warning: Product competition has intensified, and the impact of industry inventory removal has exceeded expectations.