The company is a leading company in the field of easy-to-pull cover and can production equipment, initially engaged in the production of easy-to-pull cover high-speed stamping equipment, is the forerunner of domestic production equipment, the company's new energy battery shell business was put into production in 2020, the DWI process of easy-to-pull cans was introduced into battery shell production, which is expected to improve efficiency and reduce costs. With the gradual mass production of 4680 large cylindrical batteries and the gradual release of the company's production capacity, it is expected to open the second growth curve. For the first time, coverage gives a "buy" rating.

The core manufacturer of global cans production equipment is involved in the field of battery shell manufacturing. The company was founded in 2004, initially engaged in the production of easy-to-pull cover high-speed stamping equipment, is the forerunner of domestic production equipment manufacturing. At present, the company has three major businesses, cans production equipment business is the company's pillar industry, cans equipment and battery shell manufacturing technology sharing technology, the three major business coordinated development. The new energy battery shell business, which the company will focus on in 2020, is expected to achieve rapid growth with the release of production capacity in the future, opening the second growth curve.

Can equipment still has room for growth, and the company's main business is moving forward steadily. Increased demand for soft drinks and canned beer will drive the growth of the metal packaging industry. The concentration of the can equipment industry is high, and the key barriers in the can making field are in the production equipment link, which tests the equipment manufacturing technology and system integration ability. Slick is a global leader in technology, has obvious advantages in domestic and emerging markets, and has actively expanded the markets of Europe, the United States, Japan and South Korea and other developed countries in recent years. One of the company's additional projects is the aluminum bottle high-speed automatic production line to meet the needs of customized metal packaging.

Battery shell business: highly concentrated market + large cylinder volume, the company is expected to compete for the second echelon of the industry. Under the background of the accelerated infiltration of new energy vehicles around the world and the explosive growth of energy storage, 4680, blade batteries and Kirin batteries have put forward higher requirements for the shell. The company will apply the DWI process for the production of cans to the battery shell, which is expected to improve efficiency. We estimate that the global annual market space for power and energy storage battery structures in 2025 is about 53.2 billion yuan, corresponding to 31% CAGR from 2022 to 2025. There are many players in the industry, and the current share is relatively concentrated. The global CR2 is more than 60%, and the domestic CR2 is about 80%, showing an one-super-one-strong multi-small pattern. Relying on new technology, the company is expected to compete for the second echelon in the industry.

Risk factors: the risk that the development of new energy vehicles is not as expected, the risk that the company's DWI technology is not as expected, the risk of a sharp decline in the demand for cans / caps, the risk of intensified competition in the industry, the risk of fluctuations in raw material prices, and the release of production capacity is not as expected.

Investment suggestion: the company relies on the accumulation in the field of cans equipment to transform battery shell manufacturing. With the gradual mass production of 4680 large cylindrical batteries and the gradual release of the company's production capacity, it is expected to open the second growth curve. We estimate that the company's annual net profit in 2022-23-24 will be 2.2 million yuan and 3.5 billion yuan respectively, and the compound growth rate of net profit in 2022-24 will be 62%. The average PE (18 times) and PEG (22 times) valuation of comparable companies (Kodali, Zhenyu Technology, pilot Intelligence) in 2023 (consistent wind expectations), and considering that the company's new DWI technology is expected to get a certain valuation premium, it will be given 35 times PE in 2023, with a target market capitalization of 12.3 billion yuan. Corresponding to the target price of 20 yuan, covered for the first time, given a "buy" rating.