According to the data released by the China Automobile Association in November, the new energy car market is still booming and the capital market is still partying. I have to say, in the context of this year's global economic downturn, electric cars are undoubtedly one of the few industries with strong certainty in the future.

For investors, the most impressive picture is probably: the new car-building forces represented by Tesla, Inc. and domestic mainframe factories continue to expand in the European and domestic markets, establishing a high boom cycle in the automobile electrification market, and the market value of the new energy vehicle plate flies together. and spread to the whole industry chain, and far outperformed the market.

(photo: WIND; data as of December 21, 2020)

With the large-scale outbreak of the new energy vehicle market, and under the clear policy guidance, the whole industrial chain is undoubtedly entering a new stage of rapid development. Recently, the industry's latest "15-year Plan" ("New Energy vehicle Industry Development Plan (2021-2035)") has been released, in which five strategic tasks and future development goals have been clearly defined, and the certainty of industrial chain investment has been enhanced again.

Although the future of the revolution is clear, the road is doomed to be tortuous. Xin Guobin, vice minister of the Ministry of Industry and Information Technology, said that to achieve the 20% target in the next five years, if measured at the current 5% penetration rate, it would mean an annual compound growth rate of more than 30%. In this regard, it is still very difficult to say frankly, in order to promote the realization of this goal, we not only need to learn from Europe, but also need to work both ways.

From the perspective of industrial matching, power supply has always been one of the key links restricting the development of electric vehicles. Although the car factory continues to make efforts on the battery energy density to improve the charging efficiency. But today, consumers' anxiety about the mileage of electric cars still exists, and it is also one of the main directions.

The charging pile as a necessary infrastructure, and has been brought into the category of new infrastructure, its development potential is beyond doubt. However, due to the relatively late start in China, all aspects are not mature enough, which means that there are still opportunities. At the same time, we can also see that after accelerated construction and continuous reshuffle in recent years, no matter from the vehicle-pile ratio, industry pattern or technological maturity, it has improved.

With the outbreak of electric vehicle market demand, the charging pile industry will also enter a new stage of both supply and demand driven by unipolar supply. This is undoubtedly good for service providers in the industry, but it still faces many problems, among which profit is one of the common problems.

Recently, Aoneng Construction (1183.HK), a long-term low-key motherboard company of Hong Kong stocks, began to enter the electric vehicle charging pile track, and its idea of combining foreign advanced technology to transform and upgrade the existing industry is quite interesting. On September 14 this year, the company announced a strategic partnership with Ubitricity, the second largest supplier of public charging facilities for electric vehicles in the UK, to explore the electric vehicle charging market in the Greater Bay area through a joint venture. It is worth noting that Ubitricity's shareholders include Siemens and Honda, which has advanced, mature and patented technology for operating cluster charging pile systems in major European cities.

As soon as the news came out, it quickly ignited the enthusiasm of the capital market. We can see that since September this year, the company's share price has risen rapidly, and in only about three months, it has doubled its independent market. Why is the market so optimistic about it? Is this business sexy enough? At present, it is necessary to seriously comb and examine.

First, join hands with Ubitricity of Germany to develop the market of charging piles in Dawan area.

Aoneng Construction was founded in 2000, as a well-known comprehensive construction contractor and substation builder based in Macao, after years of development, it is mainly engaged in four major business sectors, including 1) construction and decoration projects; 2) high voltage substation construction and system installation projects; 3) mechanical and electrical engineering; 4) facilities management services.

The company's main customers are Macao's major casinos, resorts and gaming enterprises, the government, Macau Electric Power and major private organizations. The representative projects include the steel structure works of Phase I / II of City of Dreams in 2007-2009 (casino skirt, Royal Crown Hotel, Rolling Stone Hotel, Grand Hyatt Hotel and Water Dance Theatre), Studio City International Holdings subprojects in 2013-2015, the rigid roof structure of the Parisian banquet hall and theatre group head in 2016, the outer frame structure of Morpheus in 2017, etc.

Under the background of Macao's transformation to non-gaming industry and the dividend of the construction policy of "Guangdong Harbour Greater Bay area", the company promotes the construction of Macao casinos and supporting infrastructure projects. As a Macao infrastructure contractor, the company has strong growth momentum and abundant on-hand orders. the visibility of growth is high. In addition, according to WIND statistics, the company has maintained a stable cash dividend since its listing, with an annual dividend rate of more than 98%, a sign of its generosity to investors.

On the basis of existing business, the latest business plan put forward by the company in early September: electric vehicle charging and mobile billing system solution can be said to be an extension of its existing energy business plate (high voltage substation, electromechanical).

(photo Source: company Cooperation Program)

According to the cooperation plan disclosed by the company, it will join hands with Ubitricity to introduce advanced European electric vehicle charging solutions to the domestic market, and with Guangdong-Hong Kong-Macau Greater Bay Area as a starting point, now mainly for Macau gaming, Hong Kong real estate enterprises and Bay area commercial, residential and other scenarios to provide targeted parking electric vehicle charging solutions, and has won orders from Macau gaming enterprises.

(photo Source: company Cooperation Program)

The number of new energy vehicles in China has increased from 420000 in 2015 to 3.81 million in 2019, with a compound annual growth rate of 73.5 percent, according to the Ministry of Public Security. Assuming that the domestic market share of charging piles in the world reaches 40%, then the market size of domestic charging pile equipment and services will exceed 500 billion yuan. From the point of view of the regional pattern, the current domestic new energy passenger vehicles are concentrated in the first and second line restricted cities in the southeast region. It is not difficult to see that Guangdong-Hong Kong-Macau Greater Bay Area is obviously the main battlefield.

The number of risks in each province and city of 2020H1 new energy passenger vehicles

(photo Source: Evergrande Research Institute)

Second, left-handed customers, right-handed technology

According to the company's plan, the charging solutions it provides are mainly used in the parking lots of six major gambling enterprises, commercial buildings in the Bay area and private residential buildings. Due to the company's long-term experience in the construction of large entertainment commercial venues and supporting infrastructure projects in Macau and abundant orders on hand, it has a natural advantage in cutting into the charging pile business.

(photo Source: company Cooperation Program)

According to the user scene, charging piles can be divided into public and private charging piles. Although the overall outlook is clear, there are still some objective problems. Among them, in the field of public charging, the core pain points are low utilization rate of charging piles, slow charging and hidden safety worries. In the field of private charging, although the cost is relatively low and the technology maturity is higher, the pile construction rate is much lower than expected due to the two difficulties of property threshold and grid capacity limitation. According to publicly reported data, by December 2019, 703000 private piles had been built, with a target completion rate of 16.3%.

The core advantage of the solution adopted by Aoneng Construction is that by making use of the existing power system, there is no need to significantly change the power supply system of the existing parking lot to realize the configuration of "one car (public / private parking space)". And through intelligent allocation to each parking space in the field to charge, improve the utilization rate of the charging system and reduce the total charging power of the whole building.

Ren Zeping, chief economist of Evergrande, said in a report that "charging infrastructure is one of the seven major areas of new infrastructure" that "smart private slow charging and high-power public fast charging" will be the mainstream direction of the charging industry in the future.

In fact, this system of Ubitricity belongs to intelligent slow charging cluster, one charging device can cover all parking spaces in the whole parking lot, and the time and power can be intelligently adjusted through the fully automatic control system to realize orderly and safe charging. Under the premise of no power expansion, the power configuration of "one vehicle, one pile" is realized, which effectively solves the current dilemma of domestic private charging piles and realizes low-cost and fast installation. Therefore, it is very suitable for private charging scenes such as residential areas.

From a technical point of view, partner Ubitricity, as the second largest supplier of public charging facilities in the UK, has outstanding competitive advantages and benefits. In terms of the scale of public charging facilities, it already accounts for more than 20% of the public charging market in the UK. The company is in the mature operation stage, which means that Aoneng Construction does not need to invest heavily in R & D, and the cost comes more from marketing, installation and maintenance, which is an area where it can easily get management, maintenance and other income.

The author believes that the scheme has obvious advantages in scene, mode and so on. Direct access to the parking lot, for car owners, have natural convenience, at the same time, through the off-peak slow charging mode, can also effectively prolong the battery life of electric vehicles. In terms of charging efficiency, the guarantee can replenish driving power of at least 50-100 kilometers per hour, which is above the average level of the industry.

From the perspective of the external market, some favorable changes are taking place. In the second half of this year, Tesla, Inc. and NIO Inc. successively stopped their own free overcharging service and lifetime free electricity exchange service, which may become an opportunity to awaken the rise of public charging pile payment consciousness.

III. Future growth points

In the short term, based on the company's advantages in the field of project construction in Macau and Ubitricity's mature R & D and operation experience, it will promote its charging pile business to achieve superior position, which will generate profit inflows one after another. Take the six major gaming enterprises in Macao as an example, in response to the transformation of environmental protection requirements and the outbreak of the electric car market, there is an urgent need for the transformation and upgrading of their parking lots. At present, the company has discussed cooperation plans with various gaming enterprises in Macau to develop a network of electric charging systems for casinos and resort hotels in Macau, and has discussed with a number of casinos in Macau to upgrade their parking lot charging facilities, and will also work with housing enterprises in the Greater Bay area to install charging systems for residential car parks and look for opportunities in Hong Kong.

In the medium to long term, with Macao as the origin and gradually spreading to Guangdong-Hong Kong-Macau Greater Bay Area, it will step into a continuous profit track under the expectation of economies of scale. The management of the company said that it conservatively expects to build 50-1000 charging piles in the Greater Bay area in the next two years. According to this estimate, if the input cost of each charging pile is about 30, 000 yuan, the input cost of pre-construction is estimated to be about 1500-30 million yuan. But as it crosses the balance of economies of scale, the average cost will enter the downward channel and usher in a period of rapid profit release. With the support of the new environmental protection policies of the governments of the Greater Bay area, Hong Kong and Macao, there is still room for multiple growth. It is estimated that under the new government subsidy policy, the number of new charging piles will reach more than 3000-6000 per year from 2021 to 2023.

It is worth noting that Siemens, one of the shareholders of Ubitricityd, is a long-term partner of Aoneng Construction, and the two sides used to be mainly in the mechanical and electrical field. As Siemens begins to accelerate the layout of the domestic charging pile market, the scope of cooperation between the two sides will be further carried out directly, and the company's space in the charging pile market will undoubtedly be further opened.

From a longer-term point of view, the electric vehicle carries the terminal role of the future life travel scene, and the charging pile as one of the entrances to the vehicle network, the data generated by it is bound to be worthy of further mining and application.

Conclusion

Aoneng's original business is mainly construction and power, with brand, project experience and customer base, taking advantage of the opportunity to expand the charging pile business, not only to open up the growth space and improve cash flow, but also to promote the reshaping of valuation as the scale grows.

Due to the impact of the epidemic, the company's profits fluctuated greatly in the first half of this year, but considering the return to normal development, under the low base effect, the performance growth next year has greater flexibility and strong valuation expectations. Since the beginning of this year, the company has continued to carry out buybacks, and recently announced a further extension of the buyback program, showing the management's confidence in the future development of the company.