\u3000\u30 Guangdong Tengen Industrial Group Co.Ltd(003003) 51 Zhejiang Yonggui Electric Equipment Co.Ltd(300351) )
The connector industry has been deeply cultivated for nearly 50 years, based on the diversified expansion of rail transit connectors. Founded in 1973, the company is a leading enterprise in the subdivided field of rail transit connectors in China. Based on rail transit connectors, the company has expanded in the field of rail transit to shock absorbers, door systems, battery boxes and other categories, as well as communication connectors, new energy vehicle connectors and military connectors. The company’s products have entered the supply chain system of domestic first-line brands and joint venture brands such as Geely, great wall, Byd Company Limited(002594) , BAIC, SAIC, FAW and Honda, as well as communication equipment companies such as Huawei, Zte Corporation(000063) , Datang Mobile and Weidi technology. The company’s new energy connector revenue grew rapidly. In the first three quarters of 2021, the company’s new energy vehicle connector revenue was 208 million yuan, a year-on-year increase of 76.3%. Benefiting from the rapid increase in the penetration rate of new energy vehicles and the continuous expansion of the company’s customer base, the company’s new energy connector revenue is expected to continue to grow high.
The rail transit industry has high barriers, and the company’s products are highly competitive. It has entered the “Fuxing” supply system. Rail transit connector is one of the key components of railway vehicle equipment. The rail transit connector industry has high barriers in product R & D and design, manufacturing process and technology development. The company has passed the certification of China Railway Product Certification Center (CRCC) and entered the “Fuxing” supply system at the same time. Supply products mainly include: vehicle end jumper, electric hook connector, rescue connector, motor connector, sensor connector, etc. In the first three quarters of 2021, the incremental business income of the company’s rail transit sector increased steadily, realizing an operating income of 466 million yuan, a year-on-year increase of 7.85%.
The rapid penetration of new energy vehicles has driven the rapid growth of connector and charging gun market. According to the data of the passenger Federation and eafo, in 2021, the sales volume of new energy vehicles in the EU was about 2.27 million and that in China was about 3.521 million. China surpassed the EU as the largest market of new energy vehicles in the world for the first time. The single vehicle value of new energy vehicle connectors is higher. With the increase of the sales proportion of new energy vehicles, the market space of vehicle connectors is expected to grow at a high speed. According to the data of China’s public and AC charging alliance, the number of new charging piles in 2020 is about 370000, an increase of about 500000 compared with that in 2020. Although the number of charging piles in China has increased rapidly, it still shows the characteristics of unbalanced and insufficient development. At present, the regional concentration of public charging piles is high, which is mainly distributed in economically developed areas such as the eastern coast. The short board of charging pile construction in the western and northeastern regions needs to be gradually supplemented; According to the data of China charging Union, the overall vehicle pile ratio in 2021 is about 3:1, which is still far from the target of 1:1 vehicle pile ratio. Benefiting from the reduction of vehicle pile ratio and the increase of DC charging proportion, we expect that the market scale of China’s charging gun is expected to increase to 2.1 billion yuan in 2025, with CAGR of 49% in the next four years.
The layout of charging gun is in the lead, and the first mover advantage of liquid cooling overcharge is significant, which is expected to gradually increase the volume. The company has a complete range of charging gun products, covering AC, DC and liquid cooling overcharge. Among them, the power of liquid cooling charging gun is greater. At the same time, it can prevent the temperature of terminals and cables from being too high and improve the charging safety. At the same time, the wire harness diameter of the liquid cooling charging gun is smaller and the charging is lighter. It is an ideal high-power charging solution to improve the energy supplement efficiency. According to the company’s announcement, the current index of the company’s liquid cooling high current charging gun can reach 600A and the voltage can reach 1000V. It has formed a batch supply and is at the international advanced level in technology. It is the first enterprise in China to commercialize the mass production of liquid cooling charging gun. At present, among the three leading overcharge brands in China, Tesla, Xiaopeng and Weilai, only Tesla has a charging power of 250KW and has applied liquid cooling overcharge technology. Liquid cooling overcharge is still in the initial stage of development and has great development potential in the future. The company has sufficient technical reserves of liquid cooling charging gun and significant first mover advantage, which is expected to seize a large market share.
Investment suggestion: we estimate that the company’s operating income in 2021 / 22 / 23 will be RMB 1.12/14.7/2.04 billion, and the net profit attributable to the parent company will be RMB 121 / 156 / 209 million. Combined with the valuation of comparable companies and the growth of the company, we give the company 35 times PE in 2022, corresponding to the target market value of 5.44 billion yuan and the target price of 14.35 yuan. For the first time, the investment rating of “Buy-A” is given.
Risk tip: the price rise of raw materials is higher than expected, the sales volume of new energy vehicles is lower than expected, the marketing progress of liquid cooling overcharge is lower than expected, the prosperity of rail transit industry is lower than expected, and the calculation assumptions are lower than expected
