Jinwu Financial News | According to the Anxin International Development Research Report, the backup battery is the basic model of Rishi International (00842), and the growth rate of starter batteries is accelerating. The company's backup battery business achieved revenue of 6.284 billion yuan, an increase of 4.6% over the previous year. Starter batteries performed well, achieving revenue of 3.687 billion yuan, an increase of 28.9% over the previous year. Power batteries achieved revenue of 1,209 billion yuan, a year-on-year decrease of 3.9%. The lead recycling business saw a decrease in sales due to some internal use. In terms of starter batteries, the company is actively expanding overseas business, developing new customers in Italy, Dubai, and the UAE, and increasing the number of old customers. Overseas sales revenue reached 950 million yuan (last year: 480 million yuan). In addition, the company is also actively expanding the replacement market. The company also acquired Tianjin Jieshi and Shunde Yuasa last year to further expand production capacity and brand resources. The company's revenue in China reached 8.157 billion yuan in '23, an increase of 8% over the previous year. However, overseas business growth slowed down last year.

The company set up a factory in Mexico and built a new battery assembly plant in Mexico last year, which is expected to be put into operation within a few months. Another battery manufacturing plant in Mexico is also being planned and is scheduled to be put into trial operation in the second quarter of 2025. Additionally, the company plans to establish a new starter battery manufacturing plant in Malaysia, which is expected to be tested by the end of 2024 or early 2025. The company's gross margin reached 14.4% in '23, an increase of 2 percentage points. The main reason is the control of manufacturing costs and the drastic reduction in product transportation costs. The company proposes a dividend of HK7 cents per share at the end of the period and 11 HK cents for the whole year. The dividend rate at the current stock price is 8% (at current price), which is quite attractive.

The bank continued that the company is a powerful lead-acid battery manufacturer with a global production capacity. Backup batteries provide new development opportunities for the company's basic disk business, rapid growth in data center scale, and transformation and upgrading of the communications industry. The automotive start/stop battery sector is fueling growth with Dongfeng, a global new energy source. The company also actively lays out energy storage business to promote diversified product development. The company's net profit for 2024/2025 is estimated to be 652/840 million yuan, and the corresponding EPS is 0.48 and 0.62 yuan/share. Based on the industry valuation situation and the company's future growth, the company was given P/E3.5x in 2024. The corresponding company's stock price was HK$1.82. There is room for a 43% increase compared to the current stock price, maintaining a “buy” rating.