Zhejiang Sanhua Intelligent Controls Co.Ltd(002050) (002050)
New energy brings new opportunities. The leader of refrigeration components sets sail for the second time, and gives a “buy” rating for the first time
Zhejiang Sanhua Intelligent Controls Co.Ltd(002050) is a global leading enterprise in refrigeration components. Since its establishment, it has continuously expanded its application fields with three categories: valve, pump and heat exchange, successively arranged the fields of household refrigerator, air conditioner and automobile, and gradually expanded to the field of new energy vehicles. Under the first mover advantage, the company’s auto parts business performance has been continuously realized in 2020 and 2021h1. We believe that under the dual promotion of global policy guidance and supply side reform, the global penetration of new energy vehicles is expected to increase rapidly, and the company is expected to continue to rely on key customer effect and capacity expansion to drive performance growth in the future. We predict that the company’s net profit attributable to the parent company from 2021 to 2023 will be RMB 1.860/2.420/2.977 billion, corresponding to EPS of RMB 0.52/0.67/0.83, and the corresponding PE of the current stock price will be 47.1/36.2/29.4 times respectively. It will be given a “buy” rating for the first time.
There is a vast space in the field of thermal management of new energy vehicles, Zhejiang Sanhua Intelligent Controls Co.Ltd(002050) has occupied part of the market
The support policies of various countries have promoted the rapid development of new energy vehicles. China, the United States and Japan have put forward targeted tax incentives, infrastructure measures and new energy vehicle development plans for the next 5-10 years. We believe that with the promotion of national policies, the development of new energy vehicles is the general trend. We estimate that the company’s global market share will be about 9% in 2020, and has occupied part of the heat management market of new energy vehicles. In addition, the announcement shows that in 2019, the market share of the company’s core products electronic expansion valve, four-way valve and heat exchanger were 41% / 47% / 35% respectively, and the market share of valve products was leading.
Leading technology, scale advantage and stable customer resources deeply build the company’s competitive barriers
(1) Realize the full coverage of vehicle valve + heat + pump, and provide customers with a variety of solutions such as battery system, engine and power system cooling, with obvious advantages of integration. (2) The leading share in the industry brings strong scale effect, and the profitability of the company is better than that of enterprises in the same industry. (3) The global layout has brought rich customer resources. The company has become a major supplier in the field of refrigeration and automotive thermal management system components, forming a strong barrier to late entrants.
Future outlook: under the trend of electrification, the performance has high growth and strong certainty
(1) High growth: the rapid development of new energy vehicles drives performance growth. It is estimated that the global new energy vehicle thermal management market will be 102.6 billion yuan in 2025, and the CAGR will be about 45% from 2020 to 2025. It is further estimated that the company’s zero revenue CAGR will be about 40% from 2020 to 2025 driven by volume and price. (2) Strong certainty: new energy vehicle enterprises have ambitious sales targets and clear capacity expansion plans. We believe that the supply side reform will support the growth of the industry. The company has developed major new energy vehicle enterprises, steadily promoted production capacity expansion, and is expected to achieve the strength of the strong under the effect of key customers.
Risk tip: the sales volume of new energy vehicles is lower than expected, the industry competition intensifies, the price of raw materials rises, etc.
