【英文】汇丰银行报告：中国电动汽车零部件China Electric Vehicle Components（99P）

英文研究报告 2019年11月06日 08:50 管理员

We initiate coverage of five A-share EV component makers – Eve, Faratronic, Yinghe and Sanhua with Buys, and Putailai with a Hold. Eve (300014 CH, RMB33.39, Buy, TP RMB47.40): As the largest player in primary lithium batteries in China with c60% market share, Eve is well positioned to benefit from the market upcycle in 2019-21, driven by the start of the smart meter replacement cycle and rising electronic toll collection (ETC) penetration. We expect Eve’s LFP battery to be increasingly competitive against NCM technology given the new energy vehicle (NEV) subsidy cuts in China. We see a potential catalyst from the potential listing of Smoore, a leading global e-cigarette original design manufacturer (ODM) which is 37.5% held by Eve. The stock’s current valuation, at 19x 2020e PE, is well below its historical average of 38x, which is attractive, in our view. Sanhua (002050 CH, RMB13.20, Buy, TP RMB16.10): The company is a global market leader in pumps and valves used in heat management. It is penetrating the auto heat management market and has a dominant market share in key components like auto-use electronic expansion valve (EXV).

We expect rising EV heat management orders to drive a 15% earnings CAGR in 2018-21e. Our target price of RMB16.10 implies a 2020e PE multiple of 28x, above the current valuation of 23x 2020e PE. Yinghe (300457 CH, RMB24.20, Buy, TP RMB32.1): The company has a c19% share in the LIB equipment market in China and is one of the two Chinese companies that can provide whole line solutions. We expect an earnings CAGR of 27% in 2018-21e, benefiting from the doubling of LIB capacity globally during the period. The stock’s current valuation, at 14x 2020e PE, is well below its historical average of 36x, which attractive, in our view. Faratronic (600563 CH, RMB43.80, Buy, TP RMB57.6): We expect rising EV penetration, together with a strong outlook for global solar installations, to drive a 9% earnings CAGR in 2018-21e. Globally, the company has a c30% market share in film capacitors used in EV and a 50% market share in film capacitors used in solar plants. The stock’s current valuation, at 19x 2020e PE, is below its historical average of 20x, which attractive, in our view, and its 2020e dividend yield is high, at 3.4%.

Eve, China’s largest primary lithium battery supplier, and Faratronic, China’s largest film capacitor supplier, are our preferred stocks. Both stocks trade at low valuations compared with peers (Exhibit 8). Faratronic also has the best operating cash flow and free cash flow (FCF) to net profit multiple among peers in 2018 (Exhibit 9). For Eve and Putailai, FCF were negative in 2018 due to investments in new capacity to cater for the growth in EV battery demand. Yinghe’s operating cash flow and free cash flow (FCF) to net profit multiple were the lowest among peers in 2018. This was due to long receivable days (285 days) and capex in new production facility in Huizhou in Guangdong province. However, we expect its capex to drop in 2019-21e following the completion of the new production facility, leading to improvements in FCF.