WuXi AppTec
New production capacity has been put into operation one after another, and the CGT business is gradually improving
Investment logic
The CGT industry is booming, and the outsourcing industry is expanding rapidly. With the continuous progress of new CGT technologies, the ceiling of market capacity is gradually opening. According to Frost & Sullivan’s calculations, the global CGT market size has increased rapidly from $50 million in 2016 to $2.08 billion in 2020, and is expected to break through the $30 billion mark in 2025. In addition, benefiting from the increase in outsourcing penetration rate and the expansion of the CGT industry, the market size of CRO & CDMO in the CGT field has also increased rapidly, and the market size is expected to reach $1.74 billion in 2025.
WuXiATU, creating a new model of global CTDMO. As a () cell and gene therapy business platform, WuXiATU has created a unique CTDMO (contract testing, development, production outsourcing services) business model, which can better cope with the current complexity and difficulty of testing, development and release in the CGT field, and effectively solve the cost problem of scaling up production. WuXiATU’s three major businesses have unique technical advantages. Through the acquisition of OXGENE, the company further enhances the technical capabilities of the company’s AAV and lentivirus platforms, thereby enhancing WuXiATU’s ability to provide customers with integrated, end-to-end cell and gene therapy product development and production services.
The new base in Philadelphia and Lingang was put into operation, synchronizing up the ante production capacity and talent pool. On November 15th, WuXiATU announced that the company’s new high-end testing laboratory expanded at the NavyYard base in Philadelphia, USA, was officially put into operation. The laboratory area is 13,000 square meters. After the production, the company’s high-end testing capacity will be tripled. On October 18th, the company’s new process research and development and commercial production center in () was officially put into operation. The new base is equipped with more than 200 independent suites and 6 complete carrier and cell production lines, including an independent liquid dosing center and a GMP-level aseptic filling isolator. These facilities will further enhance WuXi’s global production capacity, thus providing customers with greater flexibility and faster delivery times in viral vector and cell therapy services. In addition, WuXiATU continues to build up the talent pool of ante, and is expected to have 300-400 employees in China by the end of 2021 and 700-800 employees in 2022. We are optimistic about the future development potential of WuXiATU, and its performance is expected to grow rapidly.
Investment advice
It is expected that the EPS of the company in 2021-2023 will be 1.79/2 25/2.87 yuan respectively, corresponding to PE 74/58/46 respectively, maintaining the "buy" rating.
Risk warning
The risk of lifting the ban, the risk of loss of core technical personnel, regulatory risk, IP protection risk, investment risk, exchange rate fluctuation risk, raw material price increase risk, safety production and environmental protection risk, etc.
Changan Automobile
Avita E11 is grandly released, and SEV models are fully planned
Event Overview
On November 15, 2021, the new high-end brand Avita, created by Changan Automobile and Huawei, was officially launched in Shanghai. At the meeting, Avita’s development strategy was introduced for the first time and the brand’s first model, Avita 11, was unveiled.
Avita announced that Avita 11 will be officially launched in the second quarter of 2022, and the retail network will be unveiled in the same period; in the third quarter of 2022, Avita 11 will achieve the first mass production and user delivery.
Analysis and judgment:
Design is bold and innovative, focusing on user interaction
The Avita brand focuses on user interaction and aims to create a "smart avatar who understands you". Avita Emotional Intelligent Electric Vehicle attaches great importance to the exploration of consumers’ psychological real demands, as well as active user interaction, and actively explores future-oriented humanized travel technology brands. Its first model 11 has highlights in appearance design, electric intelligence, etc., and will also adopt innovative solutions in brand and user operation, channel sales and other links. Specifically:
Appearance: Avita 11 is bold and avant-garde, innovative and futuristic. On the headlights, it adopts the F-shaped split headlight combination, with slender overall lines and simple and elegant side lines. The position of the front intake grille adopts a highly enclosed design, while the lower grille adopts a black design to enhance sportiness. The tail adopts a slippery back design, and is equipped with a through tail light and a unique inverted trapezoidal rear window, which is more personalized.
Power: Avita 11 has a cruising range of over 700 kilometers, 0-100 kilometers per hour acceleration of less than 4 seconds, and a high-voltage super fast charging capacity of 200 kilowatts, outperforming models of the same class overall.
Intelligent aspects: Avita 11 is equipped with Huawei Hongmeng system, as well as Huawei intelligent cockpit platform CDC, autonomous driving domain controller ADC, and some Sandian components. The vehicle is equipped with three lidars and has an excellent computing power of up to 400Tops.
R & D: Avita Technology currently has a diversified layout in Chongqing, Shanghai, and Munich, Germany. Among them, Chongqing is the global vehicle planning, R & D and manufacturing center, Shanghai is the global brand and software R & D center, and Munich is the global design center. The three places work together to transform smart achievements into productivity and fully meet users’ consumption needs and experiences.
Production and sales: Avita’s self-built intelligent flexible production line is located in Chongqing, which can achieve the highest annual production capacity of 350,000 vehicles and meet the sales channel planning of 100 cities in the first year. In the second quarter of 22, Avita 11 will be officially released and its retail network layout will be unveiled simultaneously; in the third quarter of 22, Avita 11 will achieve the first batch of mass production and user delivery. In the next five years, Avita brand will launch four new models.
Multi-platform Qi Fali intelligent electric vehicle planning is full
The company’s electric vehicle plan is full, and the pure electric platform will be upgraded. In addition to Avita, the first strategic model C385 and the same platform models A158 and B369 under the company’s new energy product series using the new dedicated electric vehicle platform will also be listed in the second quarter of 2022; the company will further upgrade the existing three sets of pure electric chassis EPA0 (entry-level rear drive), EPA1 (medium-sized front drive) and EPA2 (large four-wheel drive) to form an SDA platform architecture. In the next five years, the company will launch 26 new smart electric vehicles based on the three platform architecture system of CHN + SDA + Ark to accelerate the intelligent layout of electric vehicles.
Investment advice
The scale effect of the company’s own brand capacity is highlighted. The joint venture brand benefits from the high growth of the luxury car market. The CHN architecture and high-end electric intelligent brand Avita jointly built with Huawei and Ningde Times are advancing steadily. The company’s endogenous profit creation ability and technological growth are accelerating. We maintain the forecast: the company’s revenue is expected to be 1028.65/1144/125.943 billion yuan in 2021-2023, the net profit attributable to the parent is 45.78/56 64/69.46 million yuan, and the EPS is 0.60/0 74/0.91 yuan, corresponding to the closing price of 18.20 yuan/share on November 17, 2021. PE is 30/24/20 times, maintaining the buy rating.
Risk warning
The iteration of self-owned brand models fell short of expectations; Ford’s strategic adjustment fell short of expectations; Mazda’s integration fell short of expectations; Avita’s brand development fell short of expectations, etc.
Chinese megalithic
Dig deep into the moat to consolidate the leading position of glass fiber
The supply and demand pattern of the glass fiber industry is improving, and the high prosperity continues. Supported by rigid demand at home and abroad, glass fiber enterprises have shipped well since 2021, inventories have continued to operate at a low level, and roving and electronic yarn prices have continued to rise. The current demand for joint-stock yarn, electronic yarn, and thermoplastic yarn is still tight, while some of the demand caused by the "lack of core" this year has been delayed or supported. Next year, electronic yarn and thermoplastic yarn will remain strong; catalyzed by the "Great Wind Base" project, the installed capacity of wind power in the 14th Five-Year Plan may exceed expectations again, thus stimulating the demand for upstream and downstream industrial chains. The demand for wind power yarn will gradually pick up, and the demand for high-end products may be combined. We believe that the supply and demand of the industry will remain matched in 2021-2022, and there will be no obvious oversupply. The high prosperity of the industry will continue or far exceed expectations. The production capacity of Jushi will continue to expand steadily, and the price may continue to run at a high level
Differentiation strategy helps the company go through the cycle. With the broadening of the application field and the increasing complexity of the application scene, the downstream industry has increasingly increased the requirements for glass fiber performance. Since 2009, the company has made continuous iterative upgrades of products through R & D innovation, leading the industry to develop high-modulus products. At the same time, the company continues to optimize the product structure and increase the proportion of high-end products. At present, the proportion of mid-to-high-end products has reached 80%. The company has made the company iron the cycle through differentiated development strategy to reduce the impact of cycle fluctuations. With the company’s third phase of 100,000 tons/year electronic yarn production capacity put into operation, the company’s total electronic yarn production capacity will reach 265,000 tons, becoming the largest electronic yarn manufacturer in China, further expanding the high-end market
Build a cost moat and build a core competitiveness. According to output, by the end of 2020, Jushi’s domestic market share was close to 40%. The product structure continued to be optimized and the scale effect was obvious. The scale of single-line kilns was significantly ahead of competitors, and production efficiency continued to improve. With the company’s new round of intelligent manufacturing production lines put into operation, it will further reduce costs and increase efficiency, widening the gap with competitors. At the same time, the company still maintains certain advantages in product formulations, infiltrants, and energy procurement costs. The company has built a solid cost moat and built a core competitiveness.
Firmly implement the "three places and five continents" strategy to enhance comprehensive competitiveness. In recent years, domestic glass fiber products have been continuously affected by overseas countervailing, anti-dumping and tariffs. In order to offset the impact of "double reverse" and tariffs and further expand overseas markets, the company has built production bases in Egypt (200,000 tons) and the United States (96,000 tons). The Indian base has temporarily stopped construction due to changes in the external environment. The company firmly implements the "three places and five continents" strategy. At present, the company is the only glass fiber company in China to build factories overseas. On the one hand, building factories overseas can reduce the impact of "double reverse"; on the other hand, it can achieve "external supply", reduce logistics and transportation costs, accelerate the capture of local market share, and enhance comprehensive competitiveness.
Investment advice: We believe that the supply and demand of the glass fiber industry will maintain a tight balance in 21-22, and the high prosperity of the industry will continue or exceed expectations. Jushi, as the industry leader, has a stable cost moat and a steady expansion of production capacity. It is expected that the company’s performance in 2021-2023 will be 57.6, 67.5 and 7.42 billion yuan respectively, corresponding to EPS of 1.44, 1.68 and 1.85 yuan respectively, corresponding to PE valuation of 11.5, 9.8 and 8.9 times respectively; with reference to the average valuation of comparable companies and the growth brought by the company’s future capacity expansion and product high-end, the first coverage will be given a "buy" rating, with a target price range of 25.2-28 yuan.
Risk warning: The supply side has expanded significantly beyond expectations, the price of raw fuel has risen sharply beyond expectations, and the company’s capacity expansion progress is less than expected; wind power installations are lower than expected.
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