Liyuanheng: Riding on the spring wind of new energy, rising star of lithium equipment

Intelligent manufacturing equipment business includes lithium battery manufacturing equipment, automotive parts manufacturing equipment, and other areas of manufacturing equipment; other areas of manufacturing equipment is mainly for the company to actively develop new products such as laptop assembly line, server assembly workshop, automatic mask production line. Intelligent manufacturing equipment business may still be the company's main source of growth.

Lithium battery manufacturing equipment business as the company's core business of intelligent manufacturing equipment, revenue of 1.189 billion yuan in 2020, a year-on-year increase of 53.16%, accounting for the proportion of the company's main business is 84.03%. Parts and services business in 18-20 years of compound annual growth rate of up to 65.19%, but the overall volume is small, its revenue in 2020 accounted for no more than 5%.

In the short term, we expect that the intelligent manufacturing equipment business is still the company's main source of growth, driven by the rapid growth of the intelligent manufacturing equipment business, related accessories, value-added and service business is also expected to expand faster.

1.3. The company's shareholding structure is stable, the founder of the technical origin

The actual controller **** shareholding of 51.42%, the shareholding is relatively concentrated. Zhou Junxiong indirectly controls 45.57% of the company's shares through Liyuanheng Investment, indirectly controls 3.17% of the company's shares through Hongbang Investment, and his spouse Lu Jiahong directly holds 2.68% of the company's shares, Zhou Junxiong and Lu Jiahong couple hold a total of 51.42% of the shares of the company, the company's de facto controller.

Zhou Junxiong technical origin, has a wealth of experience in the industry, in 2019 won the Guangdong Provincial Science and Technology Entrepreneurship leader, was declared as the main completor of the "power battery core equipment key technology and industrialization" project was awarded the 2019 Guangdong Provincial Science and Technology Progress Prize, the excellent executive team support, enterprise development The future is promising.

1.4. The completion of the fundraising project will further enhance the company's competitive strength in the market

The company's fundraising, after deducting issuance costs, is planned to be invested in the production project of industrial robotics intelligent equipment and the project of industrial robotics intelligent equipment research and development center, as well as to supplement the company's liquidity needs, with a total project investment of 795,131,000 yuan. The total investment of the project is 79513.11 million yuan.

Industrial robot intelligent equipment production project is the expansion of the company's existing business capacity, aims to introduce advanced automated production equipment and systems, in the company's existing production and R & D technology, based on the new project investment, expanding the company's production capacity, reduce product costs, and enhance the competitiveness of the company's products in the market.

Industrial robot intelligent equipment R & D center project will make the company's products more competitive in quality and cost, the development of new technologies aims to make the company's products more competitive in quality and cost through the technical research and development of laser technology, intelligent control technology, human-machine collaboration technology and other aspects of technological research and development and make a breakthrough.

2.1. EVs: Car companies **** push the development of electric vehicles, lithium battery demand continues to rise

The penetration rate of electric vehicles in the car companies increased significantly. According to our calculations, the main car companies in 2020 relative to 2019 in the penetration of electric vehicles has a more obvious increase, represented by Volkswagen, BMW, Daimler, etc., the progress of electrification of individual enterprises is more sluggish.

Car enterprises **** with the start of the development of electrification tide, lithium battery demand to 2025 is expected to reach more than 800GWH.

According to the EV planning of Volkswagen, BMW, Daimler, Toyota, Hyundai and other companies, we expect global EV demand to reach 15.68 million by 2025, with a penetration rate of 17% of the current year's auto market.

Strong demand for EVs is expected to drive a total of 809GWH of Li-ion battery demand, of which pure electric demand is about 747GWH and hybrid demand is about 62GWH.

2.2. Forklift and Power Tools: Strong Demand for Li-ion Batteries

Forklift is another demand for power batteries. According to China's electric forklift industry development white paper, by 2020 China's forklift electrification degree reached 51.27%, of which the lithium forklift penetration rate is about 39.30%.

Assuming that the forklift industry's compound growth rate over the next five years is 10%, and that the penetration of Li-ion forklifts increases to 60%, we estimate that the demand for Li-ion in the forklift sector will reach about 37GWH.

Electric tools for lithium battery demand is growing rapidly.

Power tools present cordless + lithium trend, we estimate that by 2025 power tools for lithium battery demand will be expected to reach 17.76GWH.

2.3. energy storage: lithium cost reduction + subsidies to drive the rapid release of market demand for energy storage

The local relevant Energy storage subsidy policy continues to launch, driving energy storage market demand. Along with more and more regions began to launch energy storage project subsidies, we believe that the energy storage market has a greater potential, is expected to become a lithium-ion next important growth level.

2.4. Power battery market space is vast, there is still a large gap in production capacity

Power lithium battery demand is not only driven by the electric car, its growth drivers also include construction machinery + power tools + energy storage + two-wheeled vehicles, etc., assuming that the capacity utilization rate of 65%, we expect that by 2025 the overall demand for lithium-ion battery power

If lithium manufacturers can achieve 100% capacity utilization, it will take 1114GWH, but battery manufacturers often do not have the means to achieve 100% capacity utilization, the main reason for this is:

1) battery production line production of different batteries switching between longer;

2) battery manufacturers will generally advance

According to the global head of the production capacity in recent years accounted for the proportion of the overall lithium shipments, the current supply side based on the demand side is still a large gap.

3.1. R&D investment is leading the industry, and the ability to transform scientific and technological achievements is strong

The company's products cover both the application layer and the execution layer. Based on the understanding of the downstream industry process and continuous investment in technology research and development, the company independently developed software, systems, integrated sensor technology, machine vision technology, robotics, intelligent control technology, software technology, laser technology and other advanced technologies, customized development of intelligent manufacturing solutions for downstream industry customers, to help and promote the downstream manufacturing industry to improve the level of intelligent manufacturing.

Figure 9: Company's product coverage

The proportion of R&D investment is higher than that of industry competitors.

The company focuses on the research and development of intelligent manufacturing equipment technology and process development, product design, etc., and puts R&D accumulation and technological innovation at the forefront of enterprise development.

The company's lithium battery field three-layer automatic hot and cold compression into capacity testing machine, square power battery core assembly line overall technology at the international advanced level; the company's phasor automatic assembly and testing line overall technology is at the domestic advanced level, and some of the indicators have reached the international advanced level.

The company's R&D mode is the same as that of comparable companies in the same industry, and R&D investment accounts for a higher proportion of operating income. Comparison with the R&D expense ratio of the same industry is as follows:

R&D investment has been effective, and the enterprise has strong technical reserves.

The company has mastered cutting-edge and core technologies in the industry, including imaging detection, integrated control, intelligent decision-making, laser processing, flexible assembly, digital twin and other core technologies.

As of April 1, 2021, the company owns 700 patents, and these technologies provide the basis for the company's specific use in assembly equipment, assembly equipment, welding equipment, testing equipment, etc. in intelligent manufacturing equipment. Science and technology results and different industries across the field of customer depth integration, the market response is good.

The company's scientific and technological achievements are ultimately manifested in standardized or customized complete sets of automation equipment for different applications, and its level of technology reflects the advancement of production processes in the field of lithium batteries, automotive parts and components, and other fields.

At present, Liyuanheng has achieved scientific and technological achievements related to a number of processes, for the process of in-depth study of the rich, with the overall solution of the planning, design and implementation of strengths, and different industries across the field of deep integration of customers, the company's products reflect the market, and has achieved certain economic and social benefits.

3.2. Deeply bound to downstream lithium leaders, stable and sustainable development

In the field of global consumer soft packaged lithium, new energy technology shipments accounted for more than 30% of global shipments. According to the Japanese B3 report, from 2014 to 2020, the global soft pack consumer lithium battery shipments increased by 2.671 billion, during the same period, the new energy technology shipments increased by 930 million, accounting for more than 35.16% of the global increase.

New energy technology equipment procurement scale, and the company's business scale is relatively small, the company is mainly for new energy technology to provide equipment, the first major customer revenue accounted for a relatively high. In China's power lithium field, in the past three years, the company's top five customers in the Ningde Times, BYD, Lixin and AVIC lithium installed capacity combined accounted for more than 60%, a higher degree of concentration; China's power lithium installed capacity grew from 56.90Gwh to 64Gwh, an increase of 7.1Gwh, the installed capacity of these four customers increased by 8Gwh, more than the industry's overall increment over the same period.

New Energy Technology is the leading consumer lithium battery company, especially the soft pack type consumer lithium battery, the last three years shipments ranked first in the world, the market share continues to be more than 30%.

According to the "2019 list of top 100 enterprises in China's battery industry", Ningde New Energy Technology Co., Ltd. and Dongguan New Energy Technology Co., Ltd. have operating revenues of 28.806 billion yuan and 12.556 billion yuan respectively, totaling 41.363 billion yuan, and are the largest consumer lithium batteries in the list in terms of operating revenue. enterprises.

Equipment companies and downstream lithium leading depth binding, *** with the growth.

Due to the important impact of equipment on the yield of battery products, as well as the customization characteristics of the equipment, equipment vendors have to go through multiple links, long-cycle certification, certification costs are high, lithium battery manufacturers will not easily replace the main equipment vendors.

Production equipment after a long period of feedback and detail refinement of the problem, the formation of the counterpart of the downstream battery manufacturers under the technological path of the equipment solutions, with the ability to manufacture and research and development of more demanding equipment.

The company has a long history of cooperation with new energy technology, with stability and continuity, the company with excellent product quality, continuous technical improvement, excellent process indicators, etc., from the initial homogenization of the competition with other equipment vendors, and gradually enhance the position in the new energy technology supply chain.

The company sells products to new energy technology mainly for core testing equipment and core assembly equipment, and in November 2018, the company signed a strategic cooperation agreement with new energy technology equipment, which is valid for three years.

As of May 11, 2021, the company's orders on hand for new energy technology is about 1.975 billion yuan (including tax). The cooperation between the Company and New Energy Technology is stable and sustainable.

3.3. Capacity utilization rate is steadily improving, and the production and sales rate of core lithium products is gradually picking up

The capacity utilization rate of the company's products is steadily improving, and has always been maintained at a high level. The company's products are all customized equipment, the size of different equipment, process technical difficulties and the number of parts are different, according to the number of products to measure the company's capacity utilization rate.

The company's site area, the number of design staff is sufficient, the company's own assembly and debugging staff hours do not reflect the company's production capacity, so the use of assembly and debugging staff utilization rate to reflect the company's capacity utilization.

The company's assembly and debugging personnel utilization rate from 2018 to 2020 is 118.04%, 126.08% and 124.30%, respectively. from 2018 to 2019, with the growth of the business, the company's own assembly and debugging personnel utilization rate continues to grow, and in 2020, the company's own assembly and debugging personnel utilization rate is the same as in 2019.

The lithium battery business is the company's core business, and in recent years, the downstream industry's demand for intelligent manufacturing has been growing, which is mainly reflected in the rising technical indicators, the automation to intelligence, and the development trend of special machines to the whole line and digital workshop.

In line with the industry development trend, the company's product capacity, flexibility and other technical indicators continue to rise significantly, and with the introduction and iteration of the whole line and digitalized workshop products, the number of special machines integrated into a single line continues to increase.

In 2018-2020, the production and sales rate of the company's lithium battery special-purpose machine products were 118.26%, 85.06% and 94.30%, respectively; the production and sales rate of lithium battery products in the whole line were 85.71%, 50.00% and 142.86%, respectively. After technological adjustment, the production and sales rate of this field has been gradually recovered.

3.4. Realize cross-field application, provide specialized solutions for multiple downstream industries

Most of the enterprises in the industry focus on customized equipments for part of the production process of a certain downstream industry, and it is difficult to duplicate the production in bulk across industries. The company has experience in non-standard customization projects in many application fields and is committed to accumulating standardized technologies that can be applied in different downstream industries, thus possessing the advantage of cross-field application.

The company breaks down the experience of equipment in different fields into different process platforms, gradually precipitates the process platforms into standardized platforms, and on the basis of the standardized process platforms, further forms the internal technology modules into common technologies, so as to realize the flexible application of the same technology or module in different downstream fields.

Figure 16: The company's multi-industry solutions

Currently, the company has 15 kinds of process platforms, and with the increase of application projects in the future, the company will further increase the number of precipitated process applications, and have a more specialized advantage in providing solutions for different downstream industries.

3.5. To open a new journey of lithium digital intelligence with anemone intelligence

Anemone intelligence is a set of "digital intelligence solution" for lithium industry developed by the company based on the deep understanding of the customer's pain points in the process, manufacturing, quality, cost, and management, as well as forward-looking consideration of the direction of the intelligent manufacturing. Digital intelligent whole line solution". Anemone Intelligent Manufacturing consists of "visible wisdom" intelligent equipment and "invisible wisdom" software system two parts.

"Visible wisdom" is based on equipment automation, through the back of the industrial network design, through the data collection, data analysis to real-time monitoring, intelligent scheduling, equipment predictive maintenance, through the manufacturing operation and maintenance to enterprise management of the digital barriers to improve the rationality of the production process, controllability and adaptability, enhance the efficient allocation of production resources, and improve the enterprise's production resources.

"Invisible Wisdom" is based on the factory Internet interoperability platform, factory layout and production line design system, optimizing the operation process and management strategy, and guaranteeing the management of R&D and process system.

Through the interoperability and interconnection design of people, machines, materials, methods, and environments, it provides enterprise management with a long-term development direction and blueprint planning.

Figure 18: Schematic diagram of data collection in lithium battery factory

Anemone Intelligent Manufacturing adopts the DIM data acquisition method, realizing the direct data collection of the MES system for the field equipment layer, breaking the stubborn problem of low time and incomplete, and realizing the accurate and high-speed collection of field data;

Penetrating into the whole process of lithium battery production, the digital software system that matches with the intelligent intelligent manufacturing equipment of Liyuanheng directly collects data from the bottom layer of the equipment, and the digital software system that matches with the intelligent intelligent manufacturing equipment of Liyuanheng directly collects data from the bottom layer of the equipment. The digital software system is directly integrated from the bottom of the equipment to collect data in accordance with the lithium production process, so that it can be quickly traced back to find and judge the problem, and intelligently recommend the optimal solution.

At the same time, the company through the construction of interconnected industrial Ethernet, as well as the power battery industrial information network technology standards, as the basis for digital transformation, the group management system and other related systems of data fusion, you can set the direction of data transmission, uploading or sending data synchronization synchronization method synchronization cycle and other related parameters.

The company's current main business can be divided into the field of lithium-ion, automotive field, other fields and the corresponding accessories and services business, we estimate that according to the company's business layout and historical performance:

1) lithium battery manufacturing equipment: the company's lithium business can be divided into two pieces of consumer lithium-ion and power battery.

(1) consumer lithium: consumer lithium downstream customers for ATL, consumer lithium business in recent years accounted for more than 70% of the company's total lithium business, and the proportion is still rising, mainly because of the company's products to lithium-ion full production link penetration, from the core detection link to extend to the core manufacturing, core assembly link, core assembly machine has become a new growth point for the company.

(2)

(2) power battery: the company's power battery business downstream customers covering Li Shen, BYD, Ningde Times and other head battery factory, according to the previous description, power battery ushered in a new round of expansion, and the company's current power battery business volume is relatively small, is expected to the next few years the growth rate of obvious.

Combined with the company's orders on hand, as of August 25, consumer lithium orders on hand amounted to 1.770 billion yuan (including tax), power lithium orders on hand amounted to 2.784 billion yuan (including tax), we expect that in 21-23 years, this piece of business at a faster rate of growth, corresponding to the income of 2.177, 4.037, 6.2 billion yuan, respectively.

2) automotive parts manufacturing equipment:

The company's business in this area accounts for a relatively small amount of the overall trend in the stabilization of the company did not do much R & D investment in this business, and in recent years, automotive manufacturing fixed asset investment in the completion of the amount has slowed down.

It is expected that in 21-23 years, the business in the automotive field will maintain a modest growth rate of 10%, corresponding to the revenue of 0.32, 0.35, 0.39 billion yuan.

3) Spare parts and service business:

This business is the company's other business to bring value-added income, combined with the company's overall compound growth rate in recent years, is expected to 21-23 years to maintain a 45% growth rate, corresponding to the revenue of 0.71, 104, 150 million yuan.

4) Other areas of manufacturing equipment and other businesses:

This business in 2020, there is a more significant growth, mainly due to the company's expansion of precision electronics (laptop assembly line, etc.) and new products in the medical field (mask machine), with the outbreak of the epidemic is gradually being brought under control, the company is likely to have a brief pullback.

It is expected that 21-23 years, corresponding to the total revenue of 0.91, 0.99, 109 million yuan respectively Based on this, it is expected that the company's operating income in 2021-2023 were 2.371 billion, 4.275 billion, 6.498 billion, YOY 65.82%, 80.30%, 51.99%; mother of the net profit of 223 million, 455 million, 883 million, YOY.

The company's core competitiveness in the industry, choose 2022 38.06X as the target valuation, as of September 8, 2021, the target market value of 33.423 billion yuan, upside of 24.53%, corresponding to the target price of 379.80 yuan.

1) The risk of slowdown or decline in the growth rate of lithium battery industry.

The company is mainly engaged in the research and development, production and sales of intelligent manufacturing equipment, providing high-end equipment and factory automation solutions for lithium batteries, automotive parts, precision electronics, security, rail transportation and other industries.

The company's main business income is mainly from the lithium battery field equipment, sales revenue of 604,188,900 yuan, 776,568,000 yuan and 1,189,399,700 yuan, accounting for the proportion of the main business income of 90.01%, 87.46% and 84.03%, respectively.

In the future, if the growth rate of the lithium battery industry slows down or declines, and at the same time, the company can not expand its business in other industries, the company will have the risk of slowing down the growth rate of revenue or even the decline in revenue.

2) The risk of higher customer concentration.

The company's top five customers (including enterprises under the same control) accounted for 93.91% of sales revenue, 95.79% and 86.42%, the company's high degree of customer concentration, of which the first customer new energy science and technology sales revenue accounted for the proportion of operating income of 67.39%, 74.44% and 70.28% respectively.

If individual or part of the main customers due to industrial policy, industry reshuffle, emergencies and other reasons leading to reduced market demand, operational difficulties, etc., will adversely affect the normal operation and profitability of the company;

The company's future products can not continue to get the recognition of the relevant customers, or can not maintain the advantages of the process of market competition, the company's operations will be adversely affected.

The company's future products can not continue to be recognized by the relevant customers, or can not maintain the advantage of the market competition process, the company's operations will be adversely affected.

3) The risk of performance decline.

In the recent three years, the company's operating income was RMB671,628,000, RMB888,896,900 and RMB142,996,200 respectively, and net profit after extraordinary gains and losses was RMB119,795,200, RMB75,157,700 and RMB124,613,400 respectively.

The decrease in net profit after deduction in 2019 is mainly due to the large increase in research and development expenses, followed by an increase in management expenses and selling expenses, which may lead to the risk of a slowdown or even a decline in the company's operating results in the future if the company's revenues fail to maintain sustained growth or if the increase in expenses continues to be greater than the growth in revenues.

4) The risk of stock price volatility in the short term.

The stock is a sub-new stock, the outstanding share capital is relatively small, there is a short-term risk of substantial fluctuations in the share price.

5) Measurement is subjective and for reference only.

The report involves a large number of measurements and sensitive measurements, and the results are for reference only.

--------- ---------- --

The report belongs to the original author and we do not make any investment recommendations!

For a PDF version of the report, please visit our website or click on the link: "Link"