The price and quantity of new energy vehicles have increased simultaneously, and the company's profit advantage is obvious. With the continuous increase in the penetration rate of new energy vehicles, the value of individual vehicles has significantly increased compared to gasoline vehicles. With the long-term accumulation of independent research and development, innovation, and rapid response capabilities, the company has taken the opportunity to enter and develop the supply system of new energy vehicle manufacturers, accelerating domestic substitution. The company has a strong ability to control costs and has a consistently higher profitability than its competitors, with a gross profit margin of 25.2% and a net profit margin of 13.5% in 2021, which is 3-8pp higher than its competitors. The company has a clear advantage and is expected to continue to increase its market share with cost and price advantages.

The customer structure is diverse, and the new energy transformation is smooth: Currently, the company has a customer base of more than 50 automobile OEMs, more than 50 motorcycle factories, and over a hundred secondary supporting manufacturers. The top five customers have a relatively low revenue share, accounting for 33.8% in 2021, a year-on-year decrease of 20.3pp. Among them, the largest customer share is 12.2%, a year-on-year decrease of 7.2pp. The customer structure shows a diversified development trend, and the dependence on a single customer is low. The production and sales of 22H1 new energy vehicle supporting products increased by 100% year-on-year, and it is expected that 22H2 new energy vehicle supporting products will account for 40% of the company's main business, achieving a rapid increase compared to 8.3% in 2021, and the company's new energy customer transformation is smooth.

The production capacity continues to expand, and new businesses are being constructed as the second growth pole: the output value of the company's old factory area is about 800 to 1 billion yuan. The construction of a new factory area will start in 2022, and it is currently steadily advancing. It is expected that the total output value of the company will reach 3.5 billion yuan by the end of 2024, and the production capacity will rapidly increase, actively matching downstream demand. The company is actively expanding into new fields, and its energy storage business is expected to achieve rapid growth. It has achieved new breakthroughs in areas such as rail transit, data centers, PetroChina, Sinopec, and military products, building a second growth pole.

Profit forecast and investment advice. The company is expected to have a net profit attributable to the parent company (CAGR) of 41.5% from 2022 to 2024, with a target price of 22.8 yuan and a "buy" rating for the first coverage.