Main points of investment:
The global market size of aluminum electrolytic capacitors in 2019 is about 50 billion yuan, ranking second in passive components, and China accounts for 53% of the market.
The advantages of aluminum electrolytic capacitors are as follows: 1) large capacitance per unit volume, which can reach tens to hundreds of times of other kinds of capacitors; 2) large rated capacity, up to tens of thousands of μ f or even several f / s; 3) the use of industrial materials such as aluminum, the cost is low. Therefore, the scale of aluminum electrolytic capacitors is second only to ceramic capacitors, accounting for 23% of the whole capacitor market.
Japan's four giants account for more than 50%, and Aihua Group ranks among the top four in the world and the first in China, with a market share of 8%. Aluminum electrolytic capacitors have high technical requirements in the high-end market, which is dominated by Japanese enterprises. Four of the top five manufacturers in the world are from Japan. According to Paumanok, the global share of Aihua Group rose to 8% in 2018, rising from 8th to 4th in 2013.
As the leader of the standard industry, Aihua Group has more room for growth in industrial application. In the downstream applications of aluminum electrolytic capacitors, 45% are consumer electronics, 23% are industrial, 13% are information, 7% are communications, and 5% are automobiles. In 2020, Aihua capacitors will have an annual output of 12 billion units, with revenue of 6.0,13.1 and 410 million yuan respectively in energy-saving lighting, consumer electronics and industrial fields. 82% of the capacitor income of Aihua Group comes from the consumer electronics industry, while the industry leader Chemicon mainly focuses on automotive and industrial applications, and only 9% of the income comes from consumer electronics.
The lack of capacity of high-end products results in a trade deficit and a price gap between imports and exports. Ai Hua aims at high-end products and new applications. Only a few high-end aluminum electrolytic capacitors can be produced in China, so they still rely on imports from Japan. The trade deficit of aluminum electrolytic capacitors in China is more than 600 million US dollars, and the average price of imported electricity of 0.069 US dollars per unit is about 2 times higher than that of exports. Ai Hua develops solid-state capacitors, MLPC and other high-end products, targeting good growth of automotive electronics, new energy, miniaturization market, as well as long life, medium and high voltage and other high-end markets with higher technology content. In 2020, the company made major breakthroughs in home appliances, industrial frequency conversion control, power grid smart meters, new energy, data centers and other fields.
Build the advantage of the whole industry chain of core raw materials, production equipment and related management software to achieve a higher gross profit margin than that of the same industry. Aihua Group is a small number of capacitor enterprises with the advantages of complete industrial chain of "corroded foil + formed foil + electrolyte + capacitor", which can independently develop and improve production equipment. The company has mastered a full set of technology of corroded foil and formed foil, and can produce a full range of corroded foil and formed foil from medium pressure to high voltage, small specific capacity to high specific capacity, basically replacing imports, and can meet the performance requirements of different aluminum electrolytic capacitors. From 2015 to 2020, the export output of aluminum foil increased from 850000 square meters to 4.98 million square meters, an increase of 486%, which was much higher than the 61% growth rate of aluminum electrolytic capacitors, and the self-supply rate of formed foil increased significantly.
Cover for the first time, giving a "buy" rating. It is predicted that the operating income of Aihua Group from 2021 to 2023 will be 31.4 yuan / 4.46 billion yuan respectively, and the net profit of return to its mother will be 4.8 million, 5.8 billion and 680 million respectively. The current market capitalization is 11.7 billion yuan, corresponding to a price-to-earnings ratio of 24X in 2021.
Passive components can be compared to the company's average PE of 32X in 2021, with a 33% increase in valuation and a "buy" rating.
Risks: 1) the market expansion of high-end new products such as horn capacitors, bolted capacitors and MLPC is not as expected. 2) the pace of production expansion is lower than expected. 3) the market price of aluminum electrolytic capacitor fluctuates.
