Zhuhai Enpower Electric Co.Ltd(300681) (300681)
Benefiting from the development of the new energy vehicle industry, the electric drive industry is developing rapidly, and Chinese enterprises are expected to participate in overseas competition: driven by policies and markets, the new energy vehicle market is expected to maintain rapid development in the future, which will also drive the development of the electric drive system industry. We predict that the overall scale of China’s electric drive market is expected to reach 108.8 billion yuan in 2025, compared with 37.8 billion yuan in 2021, and the industry CAGR will be 30.2% by 2025. Supporting enterprises in the Shanxi Guoxin Energy Corporation Limited(600617) industrial chain have accumulated rich experience in supporting products in the development of the industry, and are expected to occupy a certain market share in the world in the future.
The company is a leading company in Shanxi Guoxin Energy Corporation Limited(600617) automobile electric drive system. Its products have gradually entered medium and high-end pure electric vehicle customers, and there are abundant orders on hand: according to the company’s 2021 semi annual report, the company has 68 designated projects, including 3 main supporting customers and application models of class B cars and 12 main supporting customers and application models of MPV and SUV. We believe that the company’s customers have gradually expanded from the initial low-speed electric vehicle factory to medium and high-end pure electric and hybrid electric vehicle customers. In the future, we hope to obtain more orders. At the same time, the company has sufficient orders on hand and the revenue is expected to grow rapidly.
The company began to provide system level electric drive products, and the supporting value of single vehicle has increased significantly: according to the company’s annual report, the average price of medium and low-speed products in 2020 was 277.29 yuan, and the average price of new energy products was 1865.72 yuan, while new energy products accounted for 58% of the company’s H1 revenue in 2021, and the medium and low-speed products decreased to 18%. In the company’s designated projects, the supporting value of Weima model is nearly 10000 yuan, that of SAIC Maxus and SAIC diesel engine models is up to more than 20000 yuan, and that of Hangcha is up to nearly 15000 yuan. We believe that the company has been able to support six in one system level electric drive products, and the average price of products is expected to continue to increase in the future.
The technical threshold of single tube parallel connection of motor controller is high, which helps the company have strong product competitiveness: single tube parallel connection has great technical difficulty, and factors such as device current sharing, temperature rise and durability need to be considered. At present, it is only applied by Tesla and a few other enterprises. We believe that the company has accumulated more technical experience in single tube parallel connection in the field of low-speed electric vehicles and is expected to continue in the field of new energy passenger vehicles. The weight, volume and cost of the “integrated core” powertrain developed by the company based on the single tube parallel technology are more than 20% lower than the current mainstream products, which has obvious product competitive advantages.
Based on the local market, the management of the company has continuously introduced senior technical and management talents in the development process and established a luxury management team: we believe that the founding team of the company has won the listing from the highly competitive low-speed electric vehicle market in the development process and has the competitiveness of the local market. At the same time, it also attaches great importance to and invests in technology R & D, continuously introduces high-end technology and management talents, and gives sufficient equity incentives to core employees, which is expected to maintain rapid development in the future.
Profit forecast and Valuation: we believe that the company’s future profitability will gradually improve. It is estimated that the company’s revenue from 2021 to 2023 will be RMB 930 million, RMB 2.037 billion and RMB 3.647 billion, and the net profit attributable to the parent company will be RMB 37 million, RMB 173 million and RMB 395 million. We give a valuation of 50xpe of the net profit attributable to the parent company in 2022e, with a target market value of RMB 8.65 billion. It is covered for the first time and given an investment rating of “overweight”.
Risk tips: market competition intensifies, core shortage affects vehicle output, sales growth of new energy vehicles is less than expected, quality risk of the company’s products, unsmooth development of new customers, short-term stock price fluctuation risk, calculation has certain subjectivity, recovery of accounts receivable is less than expected, inventory falling price risk
