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Company Profile　　Zhuhai CosMX Battery Co Ltd is a China-based company engaged in the research and development, production and sales of consumer polymer soft encapsulated lithium-ion batteries. The Company"s products are divided into consumer lithium-ion batteries and power lithium-ion batteries.　　The consumer lithium-ion battery products include battery cells and battery packs (PACK), and the application fields include notebook computers, tablet computers, smart phones, smart wearable devices, consumer unmanned aerial vehicles (UAVs) and others.　　The power lithium-ion battery products include battery cells, modules and battery packs (PACK), which are mainly used in automobile start and stop systems and electric motorcycles. The Company"s products have been exported to India, the United States, Brazil, Canada and other regions. (Source: MarketScreener)　　Investment Highlights　　Zhuhai CosMX Battery Co Ltd (“Zhuhai CosMX Battery”/ the company), a leading player of global consumer lithium-ion battery, is accelerating to roll out business in energy storage battery.　　Established in 2007, Zhuhai CosMX Battery has been working hard in lithium-ion field for over two decades. Its main product is polymer soft encapsulated lithium-ion batteries.　　Benefited from integration and domestic substitution of PACK, the market share of the company’s consumer battery is expected to further improve.　　Due to the low base, the power battery and energy storage battery are expected to enjoy the dividends of rising sales volume, leading to considerable revenues and profits.　　As the market size of consumer battery is huge, the integration and domestic substitution of PACK facilitate its market share of consumer battery to further improve.　　1)The shipment of its battery for laptops snatched the second in market share on the globe, at 27.17% in 2021, and its clients cover the top five global laptop manufacturers. With the integrated supply of PACK, the company will further improve its market share of battery for laptops.　　2)The shipment of its battery for mobile phones is still low at present. With a continuous expansion of client and a gradual rise in new production capacity, the company’s market share of battery for mobile phones is expected to grow rapidly.　　3)Currently, it has successfully pitched into the supply chain for big clients in North America and Samsung. With deeper cooperation, manufacturers in Japan and Korea shifting into power battery and the tendency of domestic substitution, the company’s consumer battery business is promising.　　The power and energy storage batteries which are rolled out in an accelerated manner are to become the company’s second growth driver.　　Focusing on power and energy storage batteries with start and stop battery as a pointcut to its power battery, the company has become the designated supplier of SAIC and GM, and has been expanding its production capacity in an accelerated manner, with power lithium-ion battery of 10GWh annual production capacity established in Zhejiang.　　It will extend to power battery gradually, and has earned the designated supplier qualification of PHEV power battery system for Guangxi Auto.　　As for energy storage battery, the company focuses on household energy storage and energy storage for telecommunication to achieve differentiated competition, with annual output of 15GWh lithium-ion battery planned for supportive energy storage battery.　　The rise in sales volume of power and energy storage battery will promote the company’s revenue to grow.　　Earnings forecast and investment recommendation　　We estimate its revenue at CNY 11.15 billion in 2022, CNY 15.06 billion in 2023, and CNY 18.87 billion in 2024, up 7.8%, 35.1% and 25.3% from a year earlier, respectively; its net income attributable to shareholders at CNY 139 million in 2022, CNY 807 million in 2023, and CNY 1.32 billion in 2024, down 85.3%, up 480.1% and 63.9% from a year earlier, respectively, implying a P/E ratio to 183.2x, 31.6x, and 19.3x, based on the closing price on Dec. 5th at CNY 22.71. We give it an “Outperform” rating with the first coverage.　　Potential risks　　price hikes of raw materials; less-than-expected downstream demand; slower-than-expected expansion of power and energy storage batteries【免责声明】本文仅代表第三方观点，不代表和讯网立场。投资者据此操作，风险请自担。

关键词： substitution