The company's recent situation

Sales of new energy heavy trucks increased 142% year over year in 2022, and we expect to continue to double in 2023. We believe that the commercial vehicle power exchange model is basically mature, and future large-scale releases are expected to drive up the company's profit margin.

reviews

The development of commercial vehicle power exchange equipment is expected to accelerate. According to tram resource data, 25,000 new energy heavy trucks were sold in 2022, an increase of 142% over the previous year. Among them, 12,000 heavy duty power exchange trucks were sold, an increase of 285% over the previous year, and the share of power exchange models increased from 31% in 2021 to 49%. CICC expects the sales volume of electric heavy trucks to double in 2023, and the proportion of electric replacement models will continue to rise. We expect the company's electricity exchange revenue to exceed 900 million yuan in 2023. The increase will mainly come from commercial vehicles.

Judging from the future development path, we believe that heavy trucks and taxis have a clear path for commercialization, while the private car sector still needs to be played by industry alliances. The frequency of use of heavy trucks and taxis is rigid, and the profit conditions of power exchange stations are not demanding. However, the increase in the number of uses of power exchange stations for private cars requires compatibility with various models, and depends on the common use of vehicles of different brands. This involves the unification of device standards.

In the field of high-end models, the unification of standards means a loss of differentiation, which poses a great challenge to the profits of car companies, so there is great resistance. We believe that low-end models are expected to be a breakthrough in promoting power exchange models in the private car sector in the future.

The lithium battery equipment sector focuses on the middle and late stages, and an order of nearly 400 million yuan was recently signed. The company entered the lithium battery equipment field in 2017. In the early days, it mainly focused on the chemical composition process, and later expanded the battery assembly process.

On March 15, 2023, the company announced that it signed a purchase order with Mianyang Exxon for lithium battery equipment, amounting to 394 million yuan (tax included). We expect delivery and acceptance to be completed in 2023. We believe that as the lithium battery industry continues to pour into new companies, the company is expected to follow suit and continue to develop.

Automotive electronic equipment is expected to grow steadily in the future. We believe that the trend of automobile electrification and intelligence will drive demand for automotive electronics to continue to rise, and capital expenditure on related equipment is expected to remain high.

The company's automotive electronics business has been accumulated for a long time and has been fully recognized by major overseas customers. We expect the company's automotive electronics business revenue to continue to grow 20-30% over the next 3 years.

Profit forecasting and valuation

Considering delays in equipment delivery due to the pandemic, we lowered our revenue forecast for 2022 by 15%. Considering the good returns from corporate financial asset investment in 2022, the normalization of industry delivery in 2023, the scale effect is expected to increase. We maintain the 2022/2023 EPS forecast of 1.22/2.27 yuan, and introduce the 2024 EPS forecast of 2.94 yuan. The company's current stock price corresponds to 2023/2024 27x/21x P/E. We maintain our target price of 68.17 yuan, corresponding to 2023/2024 30x/23x P/E. There is 13% upward room, maintaining outperforming industry ratings.

risks

The construction of power exchange stations fell short of expectations; equipment delivery fell short of expectations; industry competition intensified.