GRESGYING DIGITAL(600212)：CHARGING PILE BUSINESS IN RAPID GROWTH

Gresgying Digital, renamed from Jiangquan Industry, divested its traditional thermal power business after acquiring assets under the same name in 2022. Currently, the Company is focusing on the field of new energy vehicle (NEV) charging and energy storage business. In recent years, the penetration rate of NEVs worldwide has continued to increase. Charging piles, as the supporting infrastructure that will facilitate the development of NEVs, are driven by both policy- and demand-side factors and may enter a period of accelerated construction in the future. We forecast a global market worth Rmb100bn by 2025. Gresgying Digital has deep technological expertise, a complete product portfolio, and a well-established service system in the NEV charging field. At the same time, it is actively expanding domestic and international customers and striving for the synergistic and integrated development of photovoltaics (PV), energy storage, and charging facilities, which bodes well for rapid growth ahead. We forecast 2023E-25E attributable net profit (ANP) of Rmb64mn/201mn/357mn. We selected Tonhe Electronics Technologies (300491.SZ), Sinexcel Electric (300693.SZ), TGOOD Electric (300001.SZ), and Autel Intelligent Technology (688208.SH) as comparable companies. After considering both the PE and PEG valuation methods, we adopt the PE valuation method out of prudence. Based on the average valuation of 31x 2024E PE for comparable companies based on Wind consensus estimates, we assign 31x 2024E PE to arrive at a 2024E target market cap of approximately Rmb6.2bn, equivalent to a target price of Rmb12, and initiate coverage with a “BUY” rating.
Company overview: Achieving rapid growth in the charging pile field. Gresgying Digital, renamed from Jiangquan Industry, divested its traditional thermal power business after acquiring assets under the same name in 2022. It is focusing on the NEV charging and energy storage business now. In 2017, the Company entered NEV charging field and introduced its first-generation self-developed direct current (DC) charging product to the market, and expanded its footprint across China. In 2019, the Company stablished Xiaoju Green Energy (Shenzhen) with Xiaoju Charge, a subsidiary of Didi Group, with business coverage of 83 cities. In 2022, its Southwest R&D and production base was officially put into operation, forming a dual-base (Xi’an and Nanchong) research-production-sales system and an integrated PV-storage-charging technology system, which further advanced the comprehensive digital energy network construction. In 1Q23, the Company achieved revenue and ANP of Rmb99mn/-1mn, implying a YoY increase of 124% and a narrowed loss, respectively.
Industry analysis: Charging piles entering an accelerated construction stage.
1) China market: On the policy side, starting from 2015, the Chinese government has successively introduced a series of policies to guide the construction of charging infrastructure; On the demand side, in recent years, the sales of NEVs have maintained rapid growth, effectively stimulating the construction of charging facilities. According to data from the China Electric Vehicle Charging Infrastructure Promotion Alliance (EVCIPA), as of the end of 2022, China’ has NEVs of 13.1mn units, and charging piles of 5.21mn units, with a NEV-pile ratio of 2.5, a significant decrease from 11.6 in 2015. 2) The European and American market: NEV number is gradually increasing, while the construction of charging piles is lagging behind. According to our estimates, the NEV-pile ratio was 6.8/12.3/15.9, respectively, in China/Europe/the US in 2021, indicating a significant charging infrastructure shortage in Europe and the US. Since 2022, policy supports have been enhanced in the European countries and the US, and the subsidy amounts and tax incentives have been gradually increasing. We expect that with the stimulation of new policies, the charging construction in Europe and the US will enter an accelerated phase in the future. We forecast that by 2025, the market size of charging piles in China, Europe, and the US will reach Rmb60.8bn/US$3.6bn/US$2.8bn, with a CAGR of 37%/41%/75% in 2022-25, respectively, indicating a faster growth rate in Europe and the US. We forecast a global market size of the charging piles to be more than Rmb100bn by 2025.
Company analysis: Building competitive edges in technology, products and services and gaining long-term growth via global expansion and the integrated development of PV, energy storage and charging facilities. The Company’s highlights include: 1) Technological strengths, rich product mix and complete services: Most of the Company’s core personnel have previously worked with industry leaders such as Emerson Electric, TGOOD Electric and TBEA; Its first-ever Starlink power distribution technology adopts modular structure, which improves the equipment efficiency. Additionally, it also has a comprehensive range of charging products and a well-established service system. 2) Sufficient orders, diversified customers and accelerated overseas expansion: The Company has sufficient orders of charging pile products, and its customers are from a wide range of industries, including State Grid, the China National Petroleum Corporation (CNPC), Xiaoju Charging, BP (formerly known as British Petroleum) and Shell; 3) Integrated development of PV, energy storage and charging facilities: The Company actively expands its energy storage micro grid business. In 2021, it partnered with Xi’an Jiaotong University and established Gresgying-Xi’an Jiaotong University Digital Energy Research Institute, focusing on research and development (R&D) of technologies such as vehicle-to-grid (V2G), integrated charging and discharging, automated charging, supercharging, wireless charging, and distributed comprehensive energy applications. In the future, the Company will likely achieve synergized development of PV, energy storage and charging facilities backed by its buildup in the field of charging, energy storage and micro grid.
Potential risks: Lower-than-expected sales of NEVs; disappointing development of high-voltage fast charging technology; insufficient subsidy policies for charging piles; intensifying market competition; less-than-expected overseas expansion of the charging pile business.
Investment strategy: Gresgying Digital, renamed from Jiangquan Industry, divested its traditional thermal power business after acquiring assets under the same name in 2022. Currently, the Company is focusing on the field of NEV charging and energy storage business. In recent years, the penetration rate of NEVs worldwide has continued to increase. Charging piles, as the supporting infrastructure that will facilitate the development of NEVs, are driven by both policy- and demand-side factors and may enter a period of accelerated construction in the future. We forecast a global market worth Rmb100bn by 2025. Gresgying has deep technological expertise, a complete product portfolio, and a well-established service system in the NEV charging field. At the same time, it is actively expanding domestic and international customers and striving for the synergistic and integrated development of PV, energy storage, and charging facilities, which bodes well for rapid growth ahead. We forecast 2023E-25E ANP of Rmb64mn/201mn/357mn. We selected Tonhe Electronics Technologies (300491.SZ), Sinexcel Electric (300693.SZ), TGOOD Electric (300001.SZ), and Autel Intelligent Technology (688208.SH) as comparable companies. After considering both the PE and PEG valuation methods, we adopt the PE valuation method out of prudence. Based on the average valuation of 31x 2024E PE for comparable companies based on Wind consensus estimates, we assign 31x 2024E PE to arrive at a 2024E target market cap of approximately Rmb6.2bn, equivalent to a target price of Rmb12, and initiate coverage with a “BUY” rating.
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   【免责声明】本文仅代表第三方观点，不代表和讯网立场。投资者据此操作，风险请自担。