WOLONG ELECTRIC(600580) 申万宏源·2024-05-20 11:32Investment Rating - The report gives a "Buy" rating for the company, with a target price implying a 35% upside potential [110] Core Views - The company is a global leader in motor manufacturing, with a strong presence in industrial, household, and electric vehicle motors [106] - It has a first-mover advantage in the emerging low-altitude economy sector, particularly in electric vertical take-off and landing (eVTOL) motor systems [107] - The company's revenue is expected to grow at a CAGR of 10.3% from 2024 to 2026, driven by industrial motor upgrades and new energy vehicle demand [110] Business Segments Industrial Motors - The company holds a 11.5% global market share in high-voltage motors and 7.5% in low-voltage motors, ranking first and fourth respectively [2] - Industrial motor revenue is projected to grow from 10.53 billion yuan in 2024 to 12.54 billion yuan in 2026, with stable gross margins around 30% [118] Household Motors - Household motor revenue declined 4% in 2023 to 3.11 billion yuan, but is expected to recover with 15% growth in 2024 [76] - The business covers motors for air conditioners, washing machines, vacuum cleaners, and kitchen appliances [14] Electric Transportation - The electric vehicle motor business grew at a 21% CAGR from 2021-2023, reaching 972 million yuan in 2023 [84] - Key customers include ZF, Geely, and XPeng through joint ventures and direct supply agreements [82] New Energy - The company is expanding into solar, wind, energy storage, and hydrogen energy sectors [13] - It provides integrated energy storage solutions for utility-scale, commercial, and residential applications [14] Market Opportunities Low-Altitude Economy - The low-altitude economy, including drones and eVTOLs, is projected to reach a trillion-yuan market by 2030 [86] - The company has developed small, medium, and large power aviation motor systems and is collaborating with major aircraft manufacturers [107] Energy Efficiency Upgrades - Government policies are driving motor efficiency upgrades, with targets to increase high-efficiency motor penetration to 70% by 2025 [46] - The company is well-positioned to benefit from equipment replacement cycles and energy-saving motor demand [70] Financial Performance - Revenue grew from 5.73 billion yuan in 2013 to 15.57 billion yuan in 2023, a 10.5% CAGR [36] - Gross margin remained stable at 25.2% in 2023, with operating expenses at 18.3% of revenue [38] - Net profit declined 33.7% in 2023 due to one-time losses, but is expected to rebound with 105.3% growth in 2024 [18] Strategic Initiatives - The company is transitioning from a product supplier to a system solution provider, focusing on motor + inverter + sensor integrated solutions [128] - It has established a global R&D system with three levels of innovation centers [40] - Through acquisitions, the company has built a portfolio of well-known motor brands across different industries [132]