Great Wall Motors
Excellent model of independent rise
Renhe: The four core competencies promote the independence of the Great Wall first.
We believe that Great Wall can take advantage of this wave of electric intelligence to take it to the next level, and the transformation from a domestic automobile manufacturing company to a global automotive technology travel service company can be successful. Reasons: 1) The soul founder actively promotes organizational change (strong back-end – large middle-end – small front-end), and establishes a market-oriented ability assessment mechanism to continue to attract talents and achieve the opening of combat units. 2) Make a little progress every day, and the modular platform – traditional powertrain – Sandian – intelligent driving – core components – hydrogen energy, etc. always adhere to the self-research of technology to form the three major technology brands of "lemon – tank – coffee". 3) Always adhere to the user-centric, and already have the ability to create large single products to product matrix. 4) Keep pace with the times, from word-of-mouth marketing to user operation, always adhere to the innovation of marketing model.
The "5 + 2" brand is on the rise in an all-round way, and the launch speed of new cars is expected to continue to exceed our expectations: 1) Haval:
Continue to consolidate the leading position of the low-end SUV of the popular car H6. 2) Wei Pai: Brand Renewal Want to build a high-end intelligent hybrid luxury car brand. 3) Tank: New shape of the first brand of domestic luxury off-road SUV. 4) Pickup: Cannon series superimposed Fengjun Continue to consolidate the first position in the pickup truck market. 5) Euler: New shape of the world’s favorite women’s electric car brand. 6) Reserve: High-end electric car brand salon project + BMW joint venture beam of light project.
Short-term (3-year dimension) core to see the Great Wall win the Chinese market and stabilize its independent first position. We expect that the short-term Great Wall sales core increase in 2021-2023 will come from the domestic market, and the world is expected to achieve 143/196/2.46 million vehicles respectively. Long-term (5-10 year dimension) Great Wall’s entry into overseas markets is expected to achieve phased results. We expect that the global market Great Wall is expected to achieve 311/4.05 million vehicles respectively in 2025/2030.
Profit forecast and investment rating: We expect the company’s net profit attributable to the parent company in 2021-2023 to be 85.73/125/16.145 billion yuan, year-on-year + 59.9%/+ 46.7%/+ 28.4%, corresponding to EPS of 0.93/1 yuan and PE of 47/32/25 times. () The average valuation of the five comparable companies in A + H shares is 45/32/24 times. In view of the joint volume of several major brands of Great Wall in the future, we believe that Great Wall should enjoy a higher valuation and maintain the "buy" rating.
Risk warning: the progress of epidemic control is lower than expected; the recovery of demand in the passenger car industry is lower than expected; the development of new energy vehicles is lower than expected.
Changan Automobile
Class A shares the depth of the company: breaking the old and building the new, as needed
Industry dimension: The total amount has increased, and the strong autonomy and certainty continue to rise
The domestic passenger car industry is gradually transitioning from the growth stage to the mature stage. In the long run, there is still room for improvement in the total amount, and the demand-side toughness is strong. We estimate that the steady-state annual sales are expected to reach 3565-41.94 million vehicles/year (+ 76.7%~ + 107.8%); the pattern dimension, the trend of independent rise is determined, the share continues to increase from 27.4% in 2008 to 41.7% in 21 years (mainly relying on SUV product dividends), and at the same time, the independence is also differentiated. The strong independent market share continues to increase, and the trend of brand head is obvious. In the long-term dimension, the independent market share still has room for improvement (currently our country’s independent market share is 40%, and the benchmark level is 70% in developed countries). The driving force is that the manufacturing end short board (modular platform capacity) is compensated, and the market demand control ability is outstanding In the later stage, we will continue to rely on electrification (pure electric + plug-in) and intelligent capabilities to break away from the joint venture.
Corporate dimension: institutional innovation, in response to demand
We believe that OEMs compete for products in the short and medium term dimensions, and compete for systems in the long term dimension. In 2017, the company launched its third venture. The core is to respond to needs, gain in-depth insight into user requests externally, and respond to employee demands internally. In 2019, it will gradually be reflected from the product level (CS75PLUS began to reflect, UNI continued to verify), which is manifested as share improvement, structural optimization, profit improvement, and brand upward. The underlying logic is system innovation, including process system, project management, decision-making power, demand control, internal incentives, etc. The internal culture is both developed and wolf-like. We believe that the company’s product cycle will gradually be ironed out. This round of the company is not a simple product cycle. The bottom layer is the significant improvement of market demand control capabilities, and the bottom layer is the innovation of the system, which is sustainable
The valuation of the main business is reconstructed upward, and high-end intelligent electric Avita contributes to resilience
From a sector perspective, the valuation of OEMs continues to rise, mainly benefiting from pattern optimization and industrial innovation. The share of strong independent brands has increased significantly. Automobiles are facing electric intelligent innovation, especially the business model changes brought about by intelligence (from selling cars to buying software). Brand high-end and intelligent OEMs have the ability to transform. Company dimension, market demand control capabilities are significantly ahead, intelligent layout is forward-looking, and high-end brand Avita has a high probability of success.
Investment evaluation and recommendations:
We expect the company’s revenue to be 973/1118/123 billion yuan in 2021-2023, and the net profit attributable to the parent will be 57.38/70 22/78.17 million yuan, corresponding to EPS0.76/0.94/1.04 yuan.
Risk warning: short-term lack of core impact, high-end brand market performance is lower than expected.
LONGi
The core competitive advantage continues to strengthen, and the single crystal leader is always strong
Global photovoltaic silicon single crystal leader, vertically integrated layout, the strong are always strong
The company’s vertically integrated layout from monocrystalline silicon wafers, monocrystalline cells to monocrystalline modules. In 2020, the company’s monocrystalline module sales were 23.96GW, ranking first in the world in shipments.
The industry has broad prospects, and affordable Internet access drives the rapid growth of PV installations
Under the development trend of carbon neutrality policies and affordable Internet access in major economies around the world, the photovoltaic industry has ushered in a new growth stage. The China Photovoltaic Industry Association expects that the global PV installed capacity will reach 1050-1295GW in 2021-2025, and China’s new installed capacity will reach 355-440GW in 2021-2025. During the 14th Five-Year Plan period, the global installed capacity will increase by 100.76% to 147.61% compared with the 13th Five-Year Plan period, driving the continued growth of demand for photovoltaic wafers and modules, and the market share of leading manufacturers is expected to be further enhanced.
Build a supply chain ecosystem to ensure continued expansion of production capacity
The company invested in Yongxiang New Energy and Yunnan Tongwei, with a 15% and 49% stake respectively, to ensure the long-term stable supply of silicon materials. The company adopts long-order agreements to lock in the supply of silicon materials, photovoltaic glass and brackets to ensure the company’s capacity demand. It is expected that by the end of 2021, the company’s silicon wafer, battery and module production capacity will reach 105GW, 38GW and 65GW respectively, and the production capacity will continue to expand.
The company continues to invest in R & D, non-silicon costs continue to decrease, and its core competitive advantage continues to strengthen
The company continued to invest in R & D, and the R & D investment cost in 2021Q1 increased by 95.70% year-on-year. The total R & D investment in the past four years reached 1.169 billion yuan, and the R & D investment was industry-leading. The company’s non-silicon cost was further reduced, of which the average unit non-silicon cost in the crystal pulling link decreased by 9.98% year-on-year, and the average unit non-silicon cost in the slicing link decreased by 10.82% year-on-year. The company’s N-type TOPCon photoelectric conversion efficiency was 25.21%, and the photoelectric conversion efficiency of HJT batteries was 25.26%, both breaking world records. The company’s BIPV products were
Financial forecast
We expect the company’s operating income from 2021 to 2023 to be 863.25/1078/138.335 billion yuan, net profit attributable to the parent 107.53/127/15.443 billion yuan, three-year CAGR of 20.68%, EPS of 2.78/3 yuan/share, corresponding to PE of 39x/33x/27x. Longji shares are a leading enterprise in the photovoltaic industry. The core competitive advantages continue to strengthen, and the strong are always strong. The first coverage is given, and the "overweight" rating is given.
Risk warning
1) Global new installations are lower than expected, 2) Raw material prices are skyrocketing, 3) Vicious price competition, 4) Changes in foreign tariff policies on Chinese PV products, and 5) The risk of the company’s overseas patent litigation with Hanwha or affecting overseas markets.
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