\u3000\u3 China Vanke Co.Ltd(000002) 011 Zhejiang Dun’An Artificial Environment Co.Ltd(002011) )
Business extension, high prosperity track, Gree’s strong endorsement
Zhejiang Dun’An Artificial Environment Co.Ltd(002011) is an old brand air-conditioning parts manufacturer in China and an industry leader in the field of refrigeration parts. After experiencing diversified business failure and guarantee loss, the company has refocused its main business to cultivate internal skills. At present, it has formed a business structure of refrigeration + automobile thermal management. The company established Dunan thermal management subsidiary in 2017 and officially entered the field of thermal management system of new energy vehicles. Based on the homology of refrigeration parts technology, the company has a solid technical foundation and quality assurance in the manufacturing of thermal management products. Relying on the core product electronic expansion valve, the company extends other products step by step and continuously improves the product matrix of thermal management system, At present, it has a considerable market share in mainstream new energy vehicle enterprises such as Byd Company Limited(002594) and parts manufacturers. With the large volume of new energy vehicles, the company is expected to seize the opportunity of secondary supply and build a new growth pole for future development. After Gree takes over, it is expected to provide the company with the necessary financial and other resource support for business expansion. At the same time, the stability of the company’s refrigeration accessories business and the customer development of refrigeration equipment business will also rise to a higher level. The soft power such as corporate governance and social reputation is also expected to be significantly improved after the change of the controlling shareholder.
Heat management industry of new energy vehicles: the volume and price rise together, the space is broad, and Dunan welcomes the second supply opportunity
In the future, the penetration rate of new energy vehicles will increase rapidly, driving the expansion of thermal management market. 1) Volume: it is estimated that the global sales volume of new energy vehicles will reach 25.23 million units in 2025, and the sales volume of Shanxi Guoxin Energy Corporation Limited(600617) vehicles will reach 13.26 million units. 2) Price: the single vehicle value of new energy vehicle thermal management is nearly 7000 yuan. With the improvement of integration and heat pump penetration, the components will become more complex, and the requirements for system synergy will be further strengthened. It is expected that the single vehicle value still has a large room for rise. In the later stage, downstream manufacturers will gradually open orders for second supply and third supply in consideration of capacity and risk diversification. Corresponding to the company’s core product automotive valves, we expect that the shipment of a single unit is about 700 yuan. Assuming that the company’s market share in the heat management refrigerant valve market will reach 20% by 2025, the company’s new business can generate revenue of 3.53 billion yuan in 2025.
Traditional refrigeration business: valve market leader, optimistic about profit improvement
The company’s global sales volume of refrigeration valves is leading. At present, it forms a duopoly pattern with its competitor Zhejiang Sanhua Intelligent Controls Co.Ltd(002050) in China’s refrigeration valve market. In the first three quarters of 2021, the company’s valve market share reached 39%, ranking first in the industry. However, there is still a gap between the company’s overall gross profit margin and net profit margin compared with comparable companies. In the future, with the positive layout of overseas business and commercial business, as well as the structural upgrading of refrigeration accessories business, the proportion of electronic expansion valves with high gross profit will increase, and the profitability of the company may be significantly improved.
We predict that the company’s revenue in 22-24 years will be 10.30/11.55/12.79 billion yuan, a year-on-year increase of + 4.7% / + 12.1% / + 10.7%; The net profit attributable to the parent company is RMB 506 / 622 / 741 million, with a year-on-year increase of + 24.8% / + 22.9% / + 19.3%, so the closing price on May 11, 2022 corresponds to 14.4x, 11.70x and 9.8xpe in 22-24 years. Referring to the development stage of comparable companies in the same industry and the company’s own new business, the company is given a “buy” rating of 20 times PE in 22 years, corresponding to the market value of 10.118 billion yuan in 2022 and the target stock price of 11.03 yuan.
Risk warning: new energy vehicle policy risk; The development of new energy heat management business is less than expected; New technology iteration; Market measurement is subjective; Uncertainty risk of share transfer.
