\u3000\u3 China Vanke Co.Ltd(000002) 245 Jiangsu Azure Corporation(002245) )
This report focuses on the growth of Jiangsu Azure Corporation(002245) from the perspective of lithium battery business for electric tools: the company’s capacity continues to expand and its global share continues to increase under domestic substitution.
Lithium battery business leads the rapid growth of the company’s business. Since 2020, lithium battery business has become the largest profit source and profit growth point of the company. In 2021, the company realized an operating revenue of 6.68 billion yuan, a year-on-year increase of + 57.2%; The net profit attributable to the parent company was 670 million yuan, a year-on-year increase of + 141.0%; Deduct the net profit not attributable to the parent company of 583 million yuan, a year-on-year increase of + 215.1%. In 2021, the company’s three businesses grew, including lithium battery business revenue + 84.8%, led business revenue + 49.3% and metal logistics business revenue + 40.8%.
Cordless power tools + localization replacement: the company’s lithium battery growth LG / Samsung power tools lithium battery growth power tools growth. 1) Cordless trend: the annual compound growth rate of the electric tool industry is 5% – 10%. Thanks to the high convenience and the rapid development of lithium battery technology, the cordless penetration rate of electric tools and the rapid increase of lithium battery shipments, the global lithium battery shipments of electric tools in 2021 were 22gwh, a year-on-year increase of 19%; It is expected to increase to 60gwh in 2026, which still has 2.7 times the growth space compared with 2021, with an annual compound growth rate of 22%. 2) Domestic substitution: as Japanese and Korean battery enterprises shift their strategic focus to the power battery track, domestic lithium battery manufacturers accelerate to enter the international first-line brand supply chain of electric tools. The company’s lithium-ion battery level has reached the international leading level, and the price is 10% lower than that of Japanese and Korean batteries. With high cost performance, it has a firm foothold among first-line brand customers and has established a long-term cooperative relationship. In 2021, the company’s market share is the second in the world. In the first quarter of 2022, the market share is 15%, and it is expected to achieve 20% in the whole year. The market share continues to increase.
Lithium battery capacity expansion, first-line customers guarantee capacity digestion, and products are constantly updated and iterated: 1) the company’s capacity is 700 million by the end of 21, and will reach 1.3 billion by the end of 22. In addition, the raising and investment project with an annual output of 2 billion ah lithium-ion batteries is in orderly progress, and the effective capacity in 21-23 years is expected to be 4 / 8 / 1.3 billion respectively. In 2021, the company’s order with Bosch agreed to provide 87 million 18650 batteries in 2022; In March 2022, the order with Stanley Agriculture Group Co.Ltd(002588) Baide was announced, and it was agreed to supply 120 / 2.4 / 280 million pieces in 22-24 years. 2) Continuous high rate battery: the company continues to promote the replacement of battery cells in Japan and South Korea with its leading technical level. In 2022, it is estimated that 100 million 25ah batteries will be shipped, and 25 million 21700 batteries will be shipped. In 2023, the volume of high rate products will accelerate, and the volume of 21700 batteries will reach 150 million. The unit price of 21700 is more than 20 yuan, which is more profitable than 2.5ah18650 products.
Continuously improve the price transmission mechanism to ensure that profitability is not affected by the rise of raw material prices: 1) the pricing method of Chinese customers accounting for 30% is basically once a month. Among the six foreign customers, four have a price lock period of 3 months and two have a price lock period of 6 months, with a short price adjustment cycle. 2) Lithium batteries for electric tools have consumption attributes, and the brand influence of the company’s downstream front-line customers is large, the product premium is high, and the cost has a large space to transmit to the downstream. We expect that the company’s current profit per grain is 1.2 yuan, equivalent to 0.17 yuan / wh, which is at a high level in the same industry.
Portable energy storage creates the second growth curve: it is estimated that the global market scale will reach 11.13 billion yuan in 21 years, will exceed 80 billion yuan in 26 years, and the total output value of the Chinese market will exceed 70 billion yuan. At present, the industry concentration is low, most products with small capacity, and most of them use ternary batteries. The company has been deeply engaged in the field of ternary cylinder for many years. It has very mature technical reserves and perfect production lines. At the same time, it also has accumulated sales channels and high-capacity battery technology for many years. It is expected to achieve good growth in the portable energy storage industry.
Profit forecast and Valuation: we expect the company to achieve a revenue of 10.34/139.7/16.92 billion yuan from 2022 to 2024, with a year-on-year increase of 55% / 35% / 21%, and a net profit of 1.021/15.341888 billion yuan, with a year-on-year increase of 52% / 50% / 23%. Referring to the valuation of comparable companies, we give the company 40 times PE in 2022, corresponding to the target price of 39.6 yuan, and give the rating of “better than the market” for the first time.
Risk warning: the price of raw materials continues to rise; Capacity expansion is less than expected; Industry competition intensifies.
