\u3000\u3000 Shenzhen Envicool Technology Co.Ltd(002837) (002837)
The company is a leading precision temperature control leader in China, focusing on precision temperature control and energy-saving products and solutions. Benefiting from the high prosperity of the whole industry, the company’s operating revenue and net profit attributable to the parent company have maintained rapid growth over the years.
The company has excellent fundamentals, the management team has rich industry experience, attaches importance to technology accumulation and independent R & D capability, the R & D investment increases year by year, and the R & D expense rate increases from 4.19% in 2017 to 6.81% in 2020, an increase of more than three times.
The gross profit margin of the company has been maintained at about 35% in recent three years. As the company continues to expand more application scenarios, the technical platform is reused, and the scale effect is becoming more and more significant, the gross profit margin is expected to be further improved in the future.
Diversified business layout and comprehensive development of various businesses. At present, the company has comprehensively arranged four main business segments: temperature control and energy-saving equipment in machine room, temperature control and energy-saving equipment in outdoor cabinet, air conditioning and service of rail transit train and air conditioning for new energy vehicles.
The rapid development of cloud computing drives the investment and construction of data center. The power consumption of data center is huge, and there is a large optimization space for energy saving. The state promotes the development of green energy conservation in the data center and supports the data center to adopt energy-saving technologies such as precision air conditioning and liquid cooling. The upstream refrigeration and temperature control industry is expected to continue to benefit. With leading technology and complete product line, the company has won the data center projects of three major operators, Tencent, Alibaba and other companies for many times, and its market share continues to expand. We believe that the business of the company maintains rapid growth.
Driven by 5g new infrastructure and energy storage, the development of cabinet temperature control equipment will usher in new opportunities. The number and power of 5g base stations are higher than 4G base stations, and there is a greater demand for heat dissipation products. The company’s cabinet cooling products maintain a leading position in the communication, energy storage and other industries. In 2021h1, the company’s operating revenue related to energy storage applications increased by 50%. We believe that thanks to the prosperity of the industry, the company’s business is expected to achieve rapid growth.
The company is far sighted and fully embraces the new energy track. With the country promoting the rapid development of the whole new energy industry and the continuous decline of the cost of electric vehicles in the future, it is expected that the penetration rate of the whole new energy bus still has great room to improve. The company not only adheres to technological innovation in the field of electric bus air conditioning, but also increases investment in special vehicles such as electric heavy trucks and core parts such as compressors.
It is expected that the scale of rail transit air conditioning market will continue to increase with the expansion of urban rail investment in the future. The company has fully entered the field of rail transit air conditioning, and its business has developed rapidly, with a gross profit margin of more than 40%, maintaining a high level. With the state promoting the construction of subway and other rail transit, the prosperity of the whole industry is expected to open the second curve of the company’s growth and drive the rapid development of the company’s business.
The company is looking forward to the layout of electronic heat dissipation and liquid cooling business, and expand the new category of EBC home air conditioning. The new business model is expected to bring new opportunities for the company’s development and is strongly optimistic about the company’s long-term growth.
Investment suggestion: the company is expected to realize a net profit attributable to the parent company of RMB 245 / 3.6/486 million from 2021 to 2023, corresponding to EPS of RMB 0.76/1.12/1.51/share. The company continues to explore new fields, and the growth of energy storage and temperature control products is strong. The historical average of PE of the company is 46.57 times. Considering the historical average, industry average and the leading position of the company, we give the company 45 times PE in 2022, corresponding to the target price of RMB 50.4 in 2022. For the first time, give a “buy” rating.
Risk warning: the construction of 5g network and data center is not as expected; Customer development and order acquisition are not as expected; The intensification of industry competition leads to the decrease of gross profit margin; Fluctuations in raw materials affect the company’s gross profit margin.
