KDL(SZ:002850) SINOLINK SECURITIES·2024-05-26 01:00Investment Rating - The report assigns a "Buy" rating for the company, marking its first coverage [1]. Core Insights - The company is a global leader in battery cell structural components, with a market share of 32% and a gross margin of 24%, significantly ahead of competitors [2][3]. - The company benefits from a positive cycle of customer loyalty, technological advantages, and economies of scale, which reinforce its competitive edge [2][3]. - The industry is expected to grow, with a projected market size of nearly 57 billion yuan by 2026, and a compound annual growth rate (CAGR) of 22% over three years [2]. - The company is well-positioned to benefit from rising utilization rates and expanding overseas markets, as well as new technologies [2][3]. Summary by Sections 1. Global Leader in Battery Cell Structural Components - The company has experienced a compound annual growth rate (CAGR) of 39% in revenue over the past five years, with a revenue of 10.511 billion yuan in 2023, reflecting a year-on-year increase of 21.5% [11]. - The net profit attributable to shareholders reached 1.201 billion yuan in 2023, up 33.3% year-on-year [11]. 2. Customer-Technology-Scale Positive Cycle - The company has a high customer retention rate due to the customized nature of its products and the long certification process for suppliers [25]. - The company has established strong relationships with major clients, including CATL and LG, which enhances its market position [18][19]. 3. Industry Utilization Rates Expected to Rise - The report anticipates a recovery in utilization rates for the company and the industry, driven by increased demand and production schedules [2][3]. 4. Favorable Overseas Market Position - The company has established a presence in overseas markets, particularly in Europe and the U.S., to meet local supply needs [2][3]. 5. Expansion into New Technologies and Fields - The company is exploring new technologies, including the production of large cylindrical batteries and harmonic reducers for the robotics sector, with expected product launches as early as 2025 [2][3]. 6. Profit Forecast and Valuation - The forecasted net profits for 2024, 2025, and 2026 are 1.42 billion yuan, 1.66 billion yuan, and 1.90 billion yuan, respectively, with corresponding price-to-earnings (PE) ratios of 18, 15, and 13 [3]. - The target price for the stock is set at 131.9 yuan per share, based on a 25x PE for 2024 [3].