Text｜Pan Xiaoyu, Zheng Cancheng
At 9:30 today, Huabao New Energy (301327.SZ) will be officially listed on the Shenzhen Stock Exchange. This time, the price was 237.5 yuan per share, which surpassed the 230 yuan per share of Naxinwei , the head company of automotive-grade analog chips.
However, is a large power bank company started from a foundry really so valuable?
The subscription of up to 110,000 yuan per lot (corresponding to 500 shares) makes many retail investors who have won the lottery can only stay away. In the whole abandoned purchase, Huabao Xinneng abandoned the purchase amount of 525 million yuan, accounting for 9.01% of the issuance.
I have to admit that the explosive new energy sector this year has given Huabao New Energy the confidence to price high. As long as the word new energy is stained, the capital market is in the palm of your hand. Although Huabaoxin can add a lot of tall labels to itself, such as “the first stock of portable energy storage”. However, from the perspective of revenue composition, Huabao New Energy is still a big cross-border seller.
When Huabao Xinneng submitted its prospectus before, 36 Krypton had reported it. Looking back at the growth history of Huabao New Energy, it is not difficult to see its significant cross-border e-commerce brand. Similar to the early cross-border sellers, Huabao Xinneng focused on the power bank ODM business when it started, and then launched its own brand “Jackery”, which paralleled the foundry and its own brand business.
However, the fast-moving and fast-moving characteristics of consumer electronics made the charging treasure track quickly roll up the Red Sea battle, while Huabao Xinneng successfully pulled out and turned to the then niche track-portable energy storage. In November 2016, Huabao New Energy officially entered the portable energy storage industry after launching the first lithium battery portable energy storage product. At present, portable energy storage products account for 78.83%, 83.52%, and 79.82% of its revenue in 2019-2021.
Portable energy storage, also known as “large power bank”, is a power supply system with built-in high-energy-density lithium-ion batteries that can provide stable AC/DC voltage output. Judging from the existing usage scenarios, the general capacity of portable energy storage is between 1000 and 3000wh, which is mainly used to power small electrical appliances during outdoor activities.
Similar to power banks and mobile phone batteries, the attributes of small energy storage products add a strong consumer electronics color to portable energy storage . Therefore, Huabao Xinneng, which relies on the energy storage outlet of portable energy storage products, faces another major controversy: Can a large power bank really be equivalent to energy storage?
Non-upstream, but use upstream pricing
In the prospectus of Huabao New Energy, two comparable companies are given: Anker Innovation and Pine Energy Technology. However, the price-earnings ratios of the two companies with the same caliber are far from each other, which are 35.30 times and 220.96 times respectively.
Comparable company P/E ratio of Huabao New Energy, Source: Wind
It can be seen that the pricing of Huabao New Energy mainly refers to the overseas household energy storage leader Paineng Technology. According to the existing issue price, the market value of Huabao New Energy after the issuance is 22.8 billion. Calculated based on the deduction of non-net profits in 2021, The price-earnings ratio (PE) is 84.6 times.
But in fact, the business of Paineng Technology and Huabao New Energy are different. The main business of Paineng Technology includes energy storage systems and energy storage cells. If it is divided by the industrial chain, Paineng Technology is at the most upstream of the industrial chain.
The energy storage industry chain includes upstream cells, battery packs, battery management systems, converters and other equipment, and the midstream includes energy storage system integrators. Among them, Paineng Technology covers all links except the energy storage converter PCS. According to Gaogong Lithium, the upstream accounts for 88% of the cost of energy storage, while the midstream only accounts for 12% of the cost. Therefore, it is not surprising that Paineng Technology, which is located in the upstream, has more bargaining power, and its PE is more than 200 times.
Energy storage battery industry chain
Cost composition of lithium battery energy storage system
In 2021, Paineng Technology has experienced a significant slowdown in the growth of non-net profit after deduction. It was not until this year’s Russian-Ukrainian war that it rose again. In the first half of this year, its net profit after deducting non-deductible items increased by 79.01% year-on-year, 67 percentage points more than last year. If the stock price does not change, the price-earnings ratio of Paineng will drop to 75 times, which is similar to the current issuance level of Huabao New Energy.
But you must know that Huabao Xinneng is only in the middle of the industry chain. Its main business is portable energy storage products and solar panels supporting energy storage products, which still need to be assembled by purchasing raw materials such as cells, inverters and solar panels from upstream. Therefore, compared with Paineng Technology, Huabao Xinneng has less bargaining power in the industry chain. Pricing power is very different, but the valuation is the same, why is it not a bubble?
Compared with another Anker innovation, the two are actually more similar. Anker Innovation and Huabao Xinneng belonged to the same period of cross-border sales. Both sold their products overseas through online methods, and in the early days, they mainly focused on the power bank business. It is worth mentioning that Anker Innovation has also launched its own portable energy storage products. According to data from the China Chemical and Physical Power Industry Association, Anker Innovation currently ranks fifth with a market share of 2.2%.
Although portable energy storage products have brought new growth points to Anker innovation, the performance of its secondary market this year has not been satisfactory. For the whole year of 2021, Anker Innovation’s deducted non-net profit decreased by 2.69% year-on-year, which was also the first decline since 2014 (Note: Anker Innovation was listed on the New Third Board in 2014), and the stock price also dropped from the highest point in 2021. 201.36 fell to the lowest point of 87.22, down more than 55%.
Anker Innovation’s share price changes in 2021, source: Wind
According to the calculation of deducting non-net profit in 2021, Anker Innovation’s price-earnings ratio is only 30 times. But if you look at the current stock price and net profit level, its price-earnings ratio is even lower, only close to 20 times.
The fall of Anker Innovation’s market value is inseparable from the coldness of the entire cross-border industry. 2021 can be described as a turbulent year for cross-border e-commerce. On the one hand, it is affected by the depreciation of the RMB exchange rate; on the other hand, it is affected by the rising cost of shipping and raw materials. Even under the catalysis of the epidemic, Anker Innovation’s operating income in 2021 increased by 34.45%, which was slower than that in 2020; but more importantly, its cost increased by 39.25% year-on-year, even exceeding the revenue increase.
This is also reflected in Huabao Xinneng. In addition to the cost of shipping, the traffic competition intensified last year. From 2019 to 2021, Huabao New Energy’s sales expenses will increase from 84 million yuan to 227 million yuan, and then double to 565 million yuan.
The sharp increase in sales expenses has caused Huabao Xinneng to increase its revenue without increasing its profits. From 2019 to 2020, Huabao Xinneng’s revenue has skyrocketed, and its net profit has increased by 200 million yuan; but in 2021, its revenue is still doubling, but its net profit has only increased by 45 million yuan. In H1 2022, the growth rate of deducting non-net profit has declined year-on-year to -2.57%.
According to the Q1-Q3 performance forecast disclosed by Huabao New Energy, non-net profit after deduction is expected to be between 198 million and 277 million yuan, a year-on-year increase of 0.11% to 36.94%. Assuming that Huabao Xinneng’s non-net profit will increase by 36% in 2022, and the stock price remains unchanged, the price-earnings ratio of Huabao Xinneng is still close to 62 times. If it is estimated at 20 times of Anker Innovations, and the stock price remains unchanged, Huabao Xinneng’s net profit needs to increase by 300%.
Huabao Xinneng PE sensitivity analysis, 36 krypton mapping
At present, the price-earnings ratio of Huabao Xinneng is undoubtedly a very high multiple among many cross-border e-commerce companies.
If there is less R&D and lack of innovation, how much product power can there be?
For Huabao New Energy, the confidence in pricing comes from the fact that the industry is in a rising period. According to the data of China Chemical and Physical Power Industry Association, the market size of the global portable energy storage industry was only 60 million yuan in 2016, and it has reached 4.26 billion yuan in 2020 after the epidemic, with an average annual compound growth rate of 190.28%. In 2026, the market size will reach 88.23 billion yuan. In addition, more than 90% of the world’s portable energy storage is produced in China.
The tuyere of energy storage is getting bigger and bigger, and the direct consequence is the surge of players who want to enter the game. Not only is the investment in portable energy storage in the primary market unabated, companies such as EcoFlow and Delan Minghai have received large investments from star institutions such as Sequoia and Source Code, with a valuation of over US$1 billion; established consumer electronics brands such as Anker Innovation, Baseus, etc. have also launched their own portable energy storage; even Huawei, Xiaomi and other companies have announced that they will invest in portable energy storage products.
The surge in players means that the competition in the Red Sea has begun to intensify. Compared with the emerging players in the primary market, Huabao Xinneng’s fundraising of 5.8 billion this time is undoubtedly a high amount of money. Therefore, after having more financial confidence, whether Huabao Xinneng will use this to start a price war of outdoor power supply, it is not yet known.
In addition, in the face of an increasingly red sea market, brand influence is another major competitive advantage of portable energy storage. And Huabao Xinneng, which has been working on this track for 6 years, has a first-mover advantage in the brand moat.
It’s just that the key to being able to withstand the brand barriers lies in the product itself. With the expansion of outdoor scenes, different brands have given portable energy storage more product definitions, such as more complex power management systems, software system development and other functions. Many investors told 36Kr that returning to the main competition point today still focuses on basic functions such as high power and charging time, as well as the product strength itself.
Specifically, take EcoFlow and Delan Minghai, which are hot in the primary market, as examples. Most of the two products are mainly high-power power supplies. For example, the German DELTA series launched by EcoFlow has a rated power of more than 1000wh, and the German DELTA Pro reaches 3600wh; The latest 757 portable energy storage product launched by Anker Innovation has a charging capacity of 1229wh; relatively speaking, Huabao Xinneng mainly focuses on low-power power supplies, but it is making efforts to high-power, newly launched The product of 2000 Pro, can reach 2160Wh capacity.
In addition to the basic functions, the product strength, including the shape design and the number of interfaces, is the point of competition between the various companies. These seemingly insignificant design changes are often the core of the brand’s tone.
For example, the German DELTA Max launched by EcoFlow is equipped with USB slow charging/fast charging, and can power up to 13 devices at the same time, and is equipped with its own smart APP; while the latest 600W parallel version of Baseus digital outdoor power supply, innovative use It adopts lithium iron phosphate battery cell and modular design, and can realize functions such as AC line parallel use. In contrast, Huabao Xinneng’s innovation still needs to be improved.
Product differences of each product, data source: company official website, e-commerce platform, 36氪 incomplete statistics
Behind the difference in product strength, it reflects the PCS and BMS capabilities and product industrial design, which is also directly linked to the R&D investment of each company. At this point, Huabao Xinneng is obviously inferior. From 2019 to 2021, Huabao New Energy’s R&D accounted for only about 2%. Anker Innovation has 6%, and Paine Technology has 7%.
In addition to product strength, the market space of the portable energy storage track has also prompted various companies to start looking for new growth points. Several trends observed by 36Kr include:
One is to bring the promotion of portable energy storage products back to China. After all, the proportion of the population participating in outdoor activities in my country is only 9.5%, which is far lower than 50% in the United States. But whether the domestic market can be opened is an open question.
The second is to constantly renovate the product definition, for example, on the software system, to give more possibilities such as self-diagnosis and detection. However, in addition to the real existence of market demand, this type of product innovation also has the problem of involution in the sales model.
The third is to focus on home storage and small commercial energy storage products in the future, which is also the second most mainstream growth curve at present, and Huabao New Energy is making efforts in this direction.
In fact, the threshold for this steering is not low. The primary constraint is that household energy storage needs to support the use of a variety of electrical appliances with different powers, which requires higher power management systems; There are also high technical barriers on other components; again, household energy storage will also involve scenarios such as household electricity self-consumption and “peak shaving and valley filling” of electricity price differences, so the threshold for energy management is also higher.
In addition to products, the sales models of the two are also very different. Portable energy storage can be directly sold online through third-party platforms due to its more consumer electronics attributes. For household energy storage, due to installation, safety and other issues, enterprises need to lay a large number of offline channels, including maintenance stores.
However, according to the prospectus of Huabao New Energy, 70% of its revenue depends on online channels. What is certain is that if it wants to enter household energy storage in the future, Huabao New Energy will need to work hard to fill the vacancy of its own offline channels.
In the current stage of high prosperity, and there is no background of the same type of target. I believe that Huabao Xinneng’s price-earnings ratio and high stock price can still tell a story.
But in the same way, a cross-border e-commerce company that relies on foundry and assembly, its own hematopoietic ability is still open to question. Even if it hits the energy storage track on the air outlet, Huabao New Energy, which has a background in consumer electronics, when it turns to more cumbersome and complex household energy storage, how long can such a high premium be maintained? Woolen cloth?
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