\u3000\u3 China Vanke Co.Ltd(000002) 245 Jiangsu Azure Corporation(002245) )
Key investment points
Cordless Tools + domestic replacement of lithium batteries, benefiting China’s leading lithium batteries
(1) the general trend of cordless tools: thanks to high safety and convenience, the proportion of cordless shipments has increased to 62% in 2020, and the market scale is expected to reach 9.8% in four years from 2021 to 2025. With the continuous improvement of cordless penetration rate, the increase of the proportion of high power products and the increase of the number of single tool cells, the global lithium battery market for electric tools is expected to reach US $6.2-7.9 billion by 2025, corresponding to 14.5% – 20.1% CAGR in five years. (2) Domestic substitution of lithium batteries: the focus of overseas head battery enterprises has shifted to vehicle power batteries. Chinese battery manufacturers will undertake the capacity of tool lithium batteries and gradually realize the substitution of high rate products.
Lithium battery capacity expansion is orderly, and excellent product strength ensures a high-quality customer base
(1) volume increase: by the end of 2022, the company’s lithium battery production capacity is expected to reach 1.3 billion, and the lithium battery project with fixed increase in investment is progressing in an orderly manner. In March 2022, the company received a major order from Stanley Agriculture Group Co.Ltd(002588) Baide and agreed to supply 120, 240 and 280 million pieces from 2022 to 2024. The performance of the company’s lithium battery products has reached the international leading level, and the product price is 10% – 30% lower than that of overseas batteries. It has successfully entered the international first-line brand supply chain of electric tools and established a long-term supply relationship. The acquisition of lithium battery orders is expected to be normalized. (2) Price rise: the supply and demand of raw materials are tight, and the price of main materials in the upstream of the battery has increased significantly. At present, the price of domestic batteries is low and has the attribute of consumption. There is a large transmission space for the cost rise to the downstream, and the price of lithium batteries of the company is expected to increase.
Led business optimization achieved profit improvement and metal logistics and distribution grew steadily
At present, the LED industry is gradually warming up. The company continues to optimize the product structure and adjust the customer structure, and implements the strategic decision of “high-end products and high-end market route”. The revenue and net profit have improved significantly year-on-year. The overall metal logistics and distribution industry continued to grow steadily, and the performance growth rate and gross profit margin remained stable.
Profit forecast and valuation
China’s leading supplier of lithium battery acceleration. It is estimated that the net profit attributable to the parent company in 21-23 years will be 677 million yuan, 1104 million yuan and 1679 million yuan respectively, with a year-on-year increase of 169.18%, 63.00% and 52.15%. Regardless of the impact of capital dilution caused by fixed increase, the EPS corresponding to 21-23 years will be 0.65, 1.07 and 1.62 yuan / share respectively, and the PE corresponding to the current stock price will be 36, 22 and 15 times respectively. In 2022, the industry average PE is 30 times. Considering the growth and safety margin of the company’s performance, we give the company a PE valuation of 30 times in 2022, which corresponds to 36% of the current stock price. Maintain the “buy” rating.
Risk tips
The risk of raw material price changes, the sales volume of cordless electric tools does not meet expectations, and the competition pattern of lithium battery market worsens.
