Investment Rating - The report initiates coverage on Tianneng Power (00819) with a "Buy" rating and a target price of HKD 10.02, based on a 2025 PE of 6x [5][68] Core Views - Tianneng Power is a leading player in the lead-acid battery market for electric two-wheelers, with a market share exceeding 40% in China [3][12] - The lead-acid battery market is expected to benefit from the recovery of the electric two-wheeler industry, driven by policies such as the new national standard and trade-in programs [1][12] - The report forecasts that the lead-acid battery market for two- and three-wheelers in China will reach 323GWh by 2030, with a market size of RMB 113.1 billion [2][34] - Tianneng Power's lead-acid battery business has a high ROE, and the company is refocusing on this segment after reducing capital expenditure in the lithium battery business [4][56] Industry Analysis - Lead-acid batteries remain the dominant choice for electric two-wheelers due to their safety, economic value, and mature after-sales service network [2][30] - The penetration rate of lithium batteries in new electric two-wheelers is less than 10%, and lead-acid batteries are expected to maintain their leading position [2][29] - The new national standard for electric bicycles may relax weight limits, potentially increasing the battery capacity of lead-acid batteries [26][34] - Trade-in policies encourage the replacement of lithium batteries with lead-acid batteries, with additional subsidies of RMB 100 for such replacements [27][29] Company Strengths - Tianneng Power has a strong distribution network with over 400,000 terminal stores and partnerships with more than 3,000 distributors [4][51] - The company's lead-acid battery business has a high ROE, with historical ROE levels of 25% and 28% in 2019 and 2020, respectively [4][56] - Tianneng Power's lead-acid battery business has a consumer goods attribute, with 75% of its products sold directly to end consumers [4][51] - The company has a significant cost advantage in lead-acid batteries due to economies of scale and efficient production capabilities [49][54] Financial Projections - Revenue for 2024-2026 is projected to be RMB 88.63 billion, RMB 94.45 billion, and RMB 101.16 billion, with year-on-year growth rates of -12%, 14%, and 12%, respectively [5][64] - Net profit for 2024-2026 is expected to be RMB 1.39 billion, RMB 2 billion, and RMB 2.38 billion, with year-on-year growth rates of -24%, 44%, and 19%, respectively [5][64] - The lead-acid battery business is expected to generate revenue of RMB 37.33 billion, RMB 42.93 billion, and RMB 48.08 billion in 2024-2026, with growth rates of -12%, 15%, and 12%, respectively [66][67] Market Position and Competition - Tianneng Power holds a leading position in the lead-acid battery market for electric two-wheelers, with a market share of over 40% [3][12] - The company's main competitors include Chaowei Power, which has a lower gross margin but higher net margin compared to Tianneng Power [45][46] - Tianneng Power's lead-acid battery business has a higher net margin than Chaowei Power, attributed to better cost control and economies of scale [45][46]
天能动力：格局优、估值低的两轮车铅酸电池龙头