\u3000\u3 Guocheng Mining Co.Ltd(000688) 063 Pylon Technologies Co.Ltd(688063) )
Global household energy storage market leader, equity incentive to enhance internal cohesion. The company is an industry-leading supplier of energy storage battery system, focusing on lithium iron phosphate soft package products. It has the integrated independent R & D and production capacity of cell, module, BMS and EMS. The products are widely used in the European market. In 2020, the company’s household energy storage products accounted for 12.9% of the market, ranking second in the world, second only to Tesla. In 2021, the company achieved business revenue of RMB 2.063 billion, a year-on-year increase of 84%, overseas revenue accounted for 81%, and the net profit attributable to the parent company was RMB 316 million, a year-on-year increase of 15%. The net interest rate decreased slightly affected by the cost, but still higher than 15%. With the rapid growth of household energy storage demand, the company’s capacity construction is accelerated, which can support the rapid growth in the next few years. The controlling shareholder of the company is Zte Corporation(000063) . In November 2021, the company implemented the equity incentive plan for the first time after listing, granting 323 core personnel 3.1 million shares, accounting for about 2% of the total share capital, binding the core management and further enhancing the internal cohesion of the company.
Household energy storage is a blue ocean, and overseas demand will accelerate in 2022. As the electricity price of overseas terminal residents continued to rise, driven by superimposed policies, the household energy storage market broke out. We expect that from 2021 to 2023, the global installed capacity of new household PV will reach 29 / 41 / 56gw, corresponding to 6 / 13 / 24gwh of household energy storage battery demand, with a year-on-year increase of 127% / 123% / 81%. At the same time, overseas home storage has obvious economy, so the battery price is relatively high, the profit is good, and the growth space is large. Focusing on the European market, the company has established long-term and stable cooperative relations with Segen, the largest photovoltaic system provider in the UK, krannich in Germany and energy in Italy. It has a high market share in some countries in Europe and Africa and has the first mover advantage in channel layout and product certification.
The company’s production capacity is expanding rapidly and the growth rate will increase in the next two years. In 2021, the company’s battery product shipment reached 1.5gwh, with a year-on-year increase of 112%, and 80% + products were exported overseas. By the end of 2021, the production capacity of electric cell is 3gwh and the system capacity is 3.5gwh. The construction of fund-raising projects is accelerated. After being put into operation, the overall production capacity of the company can reach 7gwh battery and 8gwh system. Due to the strong downstream demand and the company’s full production and sales, we expect that the company’s shipment is expected to exceed 3gwh in 2022, double year-on-year, and continue to increase in 2023. In terms of profitability, in 2021, the average price of the company’s energy storage products was nearly 1.5 yuan / wh, a year-on-year decrease of 10%, and the gross profit margin was 29.7%, a year-on-year decrease of 14 PCT, mainly due to the sharp rise in the price of raw materials and the relative lag in the price transmission of the company. We expect that the price of the company’s products can be increased by 20% in 2022. However, due to the high price of upstream lithium carbonate, we expect that the company’s gross profit margin will still be suppressed to some extent, but it will recover significantly from 2023. Overall, considering the cost pressure, the company can still achieve 90% high growth in 2022.
Profit forecast and investment rating: considering the rapid development of the household storage industry driven by high electricity price + policy, as well as the company’s high-quality channels, technology and after-sales, combined with the rapid expansion of production capacity, the company is expected to achieve a simultaneous increase in volume and profit. We expect the company’s net profit attributable to the parent company to be RMB 656 / 1204 / 1806 million from 2022 to 2024, with a year-on-year increase of 107% / 84% / 50%, corresponding to PE of 39.43/21.47/14.31 times respectively, giving a PE of 50 times in 2022, Corresponding to the target price of 211.5 yuan, a “buy” rating was given for the first time.
Risk tip: the support of energy storage policy has decreased, and the intensified competition has led to the decline of product price.
