Half a year ago, the lithium battery market rebounded strongly. The market spanned the second and third quarters, and the index rose by more than 50%. However, the lithium battery suddenly shut down recently, and it fell back to the position half a year ago in less than a month. In the same period, other power supply equipment under the same power supply category quietly brewed a wave of market prices. At the end of the third quarter, when the lithium battery market diverged downwards, it did the opposite. Since the divergence, it has risen by 10%.
The same is the power supply, what is the logic behind the different market trends?
01
Re-acquaintance with “power”
When it comes to power supply, different people have different understandings. Some people think it is the lithium battery on the new energy vehicle, some people think it is the square switching power supply in the computer case, etc. From a broad perspective, both answers are correct, and neither is quite correct.
In a broad sense, power sources can be divided into two categories: power generation and transformation. The power generation source is a relatively common battery, physical power generation device, etc., which has the function of “converting” energy, that is, converting chemical energy, mechanical energy, light energy, wind energy and other forms of energy into electrical energy.
The electric energy obtained through other energy conversions is often not directly usable. It is necessary to use a substation power supply to realize the conversion of different systems of electric energy, that is, the conversion between electric energies. .
With the implementation of the “dual carbon” policy in recent years, new energy sources such as lithium batteries, photovoltaics, and wind energy have become major trends in the future, and power equipment, an indispensable accessory for new energy sources, has also entered a period of rapid development. At the same time, power supply equipment is widely used in mature traditional fields such as 5G and aerospace, and has accumulated a large market size. Statistics show that the scale of the domestic power supply market has developed considerably in recent years. Except for the impact of the trade war in 2018 and the impact of the epidemic in 2021, it has basically maintained an annual growth rate of about 10%, and it will reach 21% in 2020. .91%.
The rise of “alternative” power supplies
Data source: 1DU Finance and Economics compiled according to the public data on the Internet
According to different functions, the power supply can be divided into switching power supply, UPS (uninterruptible) power supply, inverter, frequency converter, linear power supply, etc. Among them, switching power supply is the most mainstream product in the market. Its function is to convert between DC and AC voltages. The market share exceeds 50%. There are as many as 50 A-share listed companies related to the subdivision concept.
The rise of “alternative” power supplies
Data source: 1DU Finance and Economics compiled according to the public data on the Internet
Among many enterprises, as the representative of this kind of power supply, the “little giant” New Leon is rapidly rising. In the third quarter, ROE (return on equity) and ROA (return on assets) were as high as 22.47% and 11.88%, respectively. They both rank first in the same category, and achieved a counterattack from being out of the top ten to reaching the top within less than six years of listing.
How did New Rayneng make this leap?
02
success is no accident
The performance of Xinleineng in the past five years since its listing is very impressive-the revenue has more than quadrupled, and the net profit attributable to the parent has increased to nearly 8 times. In 2021, the revenue for the first time exceeded 1 billion to 1.478 billion yuan, and the net profit attributable to the parent also reached 274 million yuan.
In the past three years, although the operating income in 2020 has basically not increased due to the impact of the epidemic, the net profit attributable to the parent company has maintained a growth rate of close to 100%. It should be noted that under the current economic environment, most companies will inevitably experience recession, while Xinlei can continue to grow against the trend.
The rise of “alternative” power supplies
Data source: 1DU Finance and Economics compiled according to the public data on the Internet
The power supply of Xinleon is mainly used in the fields of aerospace, military industry, communication and railway power. Most of the customers are state-owned enterprises, scientific research institutes, etc. The most obvious feature of these customers is stability.
The rise of “alternative” power supplies
Image source: New Ray Energy Prospectus
In recent years, Xinleon’s main business has almost entirely focused on the two core business segments of aerospace, military and communications, accounting for 85.40% in 2017 and as high as 96.30% in 2021. And as the situation changes, Xinlei can constantly adjust the ratio of the two major businesses to achieve a balance of business allocation that can “advance and attack, and retreat and defend”.
The rise of “alternative” power supplies
Data source: 1DU Finance and Economics compiled according to the public data on the Internet
Due to the particularity of the customer’s industry, Xinlei can obtain a relatively high gross profit rate. Since its listing, the gross profit margin has stabilized at around 45%, while the industry average is only around 30%. Although the gross profit margin of New Leon’s largest aerospace and military business has declined continuously from 2017 to 2019, its business is still in a state of continuous expansion, and it has established a good customer resource advantage and long-term accumulated technology research and development advantages.
The highly focused strategy adhered to by New Leoneng has also brought high returns to the enterprise. With the popularization of 5G, the increase of expenditure on national defense and military industry, and the emerging strategy of aerospace, etc., a series of advantages accumulated in the early stage of New Ray Energy have been successfully realized in the past three years.
The rise of “alternative” power supplies
Data source: 1DU Finance and Economics compiled according to the public data on the Internet
In addition to the high-quality track and focus strategy, the internal management of New Leoneng is also relatively good.
According to the 2021 annual report of Xinleineng, the sales amount of the top five customers accounted for 13.08%, 12.51%, 11.83%, 10.36% and 8.18%, accounting for a total of 55.96%. %, the amount reached 827 million yuan, very concentrated.
The rise of “alternative” power supplies
Data source: 1DU Finance and Economics compiled according to the public data on the Internet
Highly concentrated customer groups generally have strong bargaining power, and often sellers will offer some preferential measures such as discounts and extended cash period to retain large customers. The accounts receivable turnover rate of Xinlei Energy is 4.34, ranking second in the same category. The average accounts receivable turnover rate of the military manufacturing industry is 3.18, and Xin Leineng is 1.65 times the industry average. The speed is strong. You should know that when it was first listed, the turnover rate of accounts receivable of Xinleineng was also around 3. Obviously, the current high accounts receivable turnover rate of Xinleineng is not unrelated to its good operating turnover ability and corporate reputation and word-of-mouth accumulation.
In terms of expense management, Xinlei can explain what it means to “spend money wisely”. In 2021, Xinleineng will spend a total of 360 million yuan, with an operating expense ratio of 24.33%, ranking only tenth in the industry. Among them, sales expenses, management expenses, financial expenses, etc. add up to 159 million yuan, accounting for only 80% of R&D expenses.
The rise of “alternative” power supplies
Data source: 1DU Finance and Economics compiled according to the public data on the Internet
From a fundamental point of view, can the excellent new Lei Neng meet expectations?
03
Opportunities and risks coexist, can expectations be fulfilled?
Although the development speed and quality of New Rayneng have been excellent in recent years, compared with the power equipment giants with a market value of 100 billion yuan, there are risks that cannot be ignored behind the current opportunities of New Rayneng.
In September of this year, Xinleineng successfully completed a fixed increase, raising 1.58 billion yuan for special power supply expansion, high-reliability SiP power microsystem product industrialization, 5G communication and server power supply expansion, and R&D center construction , Supplementary working capital, etc., of which more than 2/3 are invested in industrialization.
The production and procurement model of New Ray Energy is “mainly based on sales and production, supplemented by reserves”. Currently, New Ray Energy is likely to have sufficient orders, even in short supply. Therefore, it can be boldly guessed that this year is likely to be another “best harvest” year for the new Leoneng.
However, Xinleoneng’s business model is also a double-edged sword. It is a sharp weapon if you grasp it, and you will hurt yourself if you fail to grasp it.
The rise of “alternative” power supplies
First of all, although more and more single businesses can bring excess returns, under the global unstable external situation, the power supply business in the communication industry, which is one of the company’s core businesses, has certain risks. ZTE was sanctioned in 2018, and its impact on communication-related upstream and downstream industries is a typical example. In addition, due to the relative inflexibility of the centralized strategy, the emergence of alternative products and the change of investment track style will have a certain impact on investors’ investment preferences and the difficulty of corporate financing. At present, the most popular business is related to new energy power equipment , And thus created a power equipment giant such as Sungrow.
Secondly, the cash ratio of Xinleineng has dropped rapidly in recent years, only about 20% in the past two years, while the industry average has reached 73.42%. The lower cash ratio shows that Xinlei can invest as much funds as possible in R&D and production. However, with the reduction of cash stock, the risk of problems caused by the rupture of the capital chain of enterprises will also increase. Of course, Xinleineng added nearly 500 million monetary funds in this fixed increase, which alleviated this potential risk to a certain extent.
conclusion
Maybe some people think that Xinlei Neng is not famous enough and its story is not sexy enough, but how many companies can stick to their business philosophy in today’s hot market? Yes gold always shines, it just takes time. Only when the heat of the hype subsides will we know who is really valuable.