\u3000\u3000 Hnac Technology Co.Ltd(300490) (300490)
Water conservancy automation leader, cut into the new energy track. In the early stage, the company’s main products were oriented to the automation market of small and medium-sized hydropower stations, pump station automation and information market. By the end of 2012, about 10000 small and medium-sized hydropower stations in China had adopted computer monitoring and protection devices or systems, of which Hnac Technology Co.Ltd(300490) / huazi group accounted for about 30%. At present, the company leads the world in the market share of automatic control equipment for power stations and pumping stations. Subsequently, the company entered the new energy track through the acquisition of Jingshi electromechanical and other means. At present, the company’s main businesses include: 1) new energy equipment and services, including lithium battery equipment, clean energy control, energy storage, intelligent power transformation and distribution, etc. in 2021h1, the revenue of lithium battery intelligent equipment reached 340 million yuan, accounting for 45.6% of the revenue; 2) Environmental protection, including membrane and membrane device, water conservancy and water treatment automation, etc.
Electrification continued to advance, and lithium battery equipment grew rapidly. The capacity expansion of battery plants outside China is accelerated. The capacity demand in 2025 will increase by about 2517gwh compared with that at the end of 2020. According to the equipment investment of 200 million per GWH, the total demand will exceed 500 billion yuan from 2021 to 2025. The rear section of lithium battery is mainly the activation of cells, and the equipment value accounts for about 30%. Therefore, it can be estimated that the equipment demand in the rear section of 2021-2025 will exceed 30 billion yuan. Chemical composition and volume separation are mainly based on electrochemical technology and have high requirements for automation ability. Relevant enterprises include Titan, Zhejiang Hangke Technology Incorporated Company(688006) , Optimus and Jingshi Electromechanical.
The policy continued to be implemented, and the energy storage market ushered in an explosion. According to woodmackenzie’s prediction, the scale of new energy storage projects put into operation in the world will increase from 12gw in 2021 to 70gw in 2030, and the CAGR will reach 21.6%. According to the statistics of Beijing Centergate Technologies (Holding) Co.Ltd(000931) energy storage industry technology alliance, in 2021, China’s central and local governments issued more than 130 policies related to energy storage, and the national level made it clear that the new energy storage will change from the initial stage of commercialization to large-scale in 2025, with an installed capacity of more than 30 million KW; At the same time, all localities have defined the allocation proportion of energy storage ranging from 5% to 30%. In the first half of 2021, the installed capacity of new energy storage in China exceeded 10GW, with a year-on-year increase of more than 600%.
The performance has ushered in rapid growth, and the profitability is expected to improve. Benefiting from the improvement of the prosperity of lithium battery equipment industry since the second half of 2020, in the first three quarters of 2021, the company achieved an operating revenue of 1.13 billion yuan, a year-on-year increase of 110.3%, and the net profit attributable to the parent company was 30 million yuan, a year-on-year increase of 354.7%. In the first three quarters of 2021, the company’s gross profit margin was 28.8% and net profit margin was 1.9%. We believe that with the continuous large-scale demand of downstream, the easing of the shortage of raw materials such as chips and the rapid improvement of its scale effect, the company’s profitability is expected to gradually recover in the future.
Lithium battery energy storage two wheel drive ushers in a new stage of development. In the early stage, the company was mainly engaged in water conservancy automation system and pump station related business, with a high market share in related fields. After years of development, the company has become a multi-energy IOT technology pilot enterprise. We believe that the company is expected to enter a new growth period with the advantages of technology, products and customers and the lithium battery and energy storage business.
\u3000\u30001. Lithium battery business: the subsidiary Jingshi electromechanical has mastered the core technology of lithium battery post-processing system including formation and capacity separation, detection and automation. The products can cover cylindrical / square / soft package. Customers include catl, ATL, honeycomb energy, Guangzhou Great Power Energy&Technology Co.Ltd(300438) etc. Since 2021, it has successively won orders for lithium battery equipment from catl and honeycomb energy. According to the statistics of lithium battery of Gaogong, it is estimated that the energy capacity of Contemporary Amperex Technology Co.Limited(300750) and honeycomb will reach or exceed 600gwh in 2025. With the subsequent release of production capacity, the lithium business will maintain rapid growth, and the embodiment of scale effect is expected to make the profit side more elastic than the revenue side.
\u3000\u30002. Energy storage business: Based on the experience in the hydropower field, the company has successfully entered the new energy field and prospectively laid out the energy storage field. The EMS, PCs and energy storage system independently developed by the company have been successfully applied to the State Grid, South Grid and overseas projects, including the micro grid project in the park, Chenzhou Jiucaiping energy storage power station, Nauru “photovoltaic + energy storage” Hunan Shaoyang Chengbu Rulin 100MW / 200mwh energy storage power station, and has carried out in-depth cooperation on energy storage with the State Grid, South grid, power construction, energy construction and the Three Gorges. In addition, Hnac Technology Co.Ltd(300490) signed the new energy cooperation framework agreement with Hunan Investment Group under the strategy of “Ningdian entering Hunan”, and signed the first project investment agreement to enter the park. It jointly established an energy storage battery pack plant with an annual capacity of 1GWh (phase I), and gradually invested PCs, EMS, BMS, photovoltaic inverter, power grid coordination controller, energy storage system integration and other product lines according to market demand.
\u3000\u30003. Proposed issuance of convertible bonds and overweight energy storage business: the company plans to issue convertible bonds to unspecified objects with a total fund-raising of no more than 1 billion yuan for the acquisition of 96.20% equity of Chengbu shanneng (60 million yuan / 66 million yuan, proposed fund-raising / total investment, the same below), the construction of Chengbu Rulin 100MW / 200mwh energy storage power station (150 million yuan / 460 million yuan) Guidong County 100MW / 200mwh energy storage power station construction (RMB 400 million / RMB 430 million), industrial park “photovoltaic + energy storage” integration project (RMB 90 million / RMB 108 million), supplementary working capital, etc. The company is acquiring the control right of Chengbu shanneng and operating the energy storage power station, which is conducive to accelerating the penetration in the energy storage market. Taking advantage of the product and technical advantages accumulated by EMS and PCs independently developed and continuously used on the user side and power grid side, the company can give full play to the synergy and improve the market competitiveness.
Investment advice
Hnac Technology Co.Ltd(300490) has a leading market share in water conservancy automation system and pump station related fields, and has expanded horizontally to the field of new energy. It is a leader in lean electromechanical technology and products. It has in-depth cooperation with catl, honeycomb energy and other enterprises. At the same time, it has independently developed PCs, EMS and other products and prospectively laid out the energy storage field. With the explosion of downstream demand, lithium battery and energy storage business is expected to become a new growth pole of the company.
We estimate that the company’s revenue from 2021 to 2023 will be 2.1 billion yuan, 3.39 billion yuan and 4.42 billion yuan respectively, and the net profit will be 58 million yuan, 207 million yuan and 296 million yuan respectively. At present (January 20, 2022), the corresponding P / E ratios from 2021 to 2023 are 97.5x, 27.3x and 19.1x, covering the “buy” rating for the first time.
Risk tips
The risk of gross profit margin decline due to intensified market competition, the risk of capacity expansion less than expected, the risk that the production expansion progress of power battery customers is less than expected, the risk that the energy storage penetration rate is less than expected, and the risk of technical route change.
