Main points of investment
Revenue continues to grow in recent years, and New Power Company mainly provides precision metal parts products to customers in 3C, automobiles, power tools and other downstream application industries in 2020, and its revenue and net profit have maintained rapid growth in recent years. From 2015 to 2020, the company's revenue CAGR was 26.1%, and the home net profit CAGR was 79.6%. In the past two years, wearable devices such as AirPodsPro and PowerbeatsPro continued to increase the demand for parts and components, helping the company accelerate its growth, with a revenue of 517 million yuan (+ 16.7%) in 2020 and a net profit of 112 million yuan (+ 3.9%).
Profitability remains at a high level. From 2018 to 2020, the comprehensive gross profit margin of the company was 36.4%, 42.9% and 41.2%, respectively, and the net profit rate was 17.2%, 24.4% and 21.6%, respectively. The proportion of 3C products with high gross margin increased and increased the scale effect, so that the company's profitability was maintained at a high level.
Automobile + power tools provide a stable market, 3C industry opens new growth opportunities 1) 3C industry: smart wearable devices have been growing rapidly in recent years, and its shipments are expected to maintain a 40% growth rate from 2021 to 2023; the company continues to go deep into Apple Inc's supply chain and occupies a position of exclusive supply of some products, which will significantly benefit from the growing demand for downstream 3C new products.
2) Automobile industry: from 2012 to 2019, the growth rate of production and sales of new energy vehicles in China is much higher than that of the automobile industry, and the improvement of performance requirements for parts and components of new energy vehicles will hedge the risk of lack of prosperity in the industry. In addition, the automobile manufacturing industry continues to upgrade the requirements for lightweight, intelligent and new energy modularization of skylight parts, which will further promote the growth of the demand for precision parts for automotive skylights.
3) Power tools industry: the endogenous innovation trends such as multi-use of one machine and clean energy will increase the application proportion and processing requirements of new parts and components, and further increase the certainty of the performance growth of power tool parts in the context of global economic recovery.
Technology + customer base, double advantages to ensure performance growth
1) the core technical personnel of the company are stable, laying the foundation for the sound operation of the company. Mr. Xu Huijun, Chairman of the Board, has been engaged in precision metal parts processing for more than 40 years, and has participated in the research and development of many core technologies as the company's core technicians. there has been many years of precipitation and accumulation of precision and ultra-precision metal parts processing technology in 3C category, automobile, power tools and photovoltaic fields.
2) master the core technology of precision metal parts such as 3C, automobiles and power tools, and build competitive advantages with diversity, high precision and automation. The company has mastered many core technologies, such as high precision special-shaped spring forming technology, fatigue resistant coil spring high efficiency forming and testing technology, high stability precision tension spring, compression spring, torsion spring forming and testing technology, high precision and large tonnage continuous stamping technology, and so on. It also has the advantages of diversified processing technology, high processing precision and high degree of automation.
3) with the spirit of craftsmen deeply ploughing the field of precision metal parts, the products enter the supply system of industry benchmarking customers. The company has a long history of cooperation with well-known downstream customers such as Foxconn, Weibaster and Morse, and the transaction amount has increased year by year; in recent years, the company has gone deep into Apple Inc's supply chain, occupying the exclusive supply status of some products such as AirPodsPro, and the scale of related revenue is accelerating.
Profit forecast and investment advice: we expect the company's EPS in 2021-2023 to be 0.91,1.35,2.04 yuan per share respectively, and the current stock price corresponding to the dynamic PE is respectively times that of 24-16-11. We are optimistic about the future growth of the company, and there is room for improvement in valuation. For the first time, the company has been given an "overweight" rating.
Risk tips: downstream industry development is not as expected; the speed of new product research and development is not as fast as expected; technological innovation is less than expected risk; global trade relationship uncertainty increases the risk.