Weihong Co., Ltd.: leader of Industrial Motion Control system
The company's main products are industrial motion control system, servo drive system and industrial Internet of things, the products are mainly used in CNC machine tools. The company's motion control system mainly includes engraving and milling control system (carpentry, 3C, metal, etc.), cutting control system (laser, water, flame, etc.), manipulator control system and so on. In January 2021, the company acquired and opened in Nanjing to supplement the product line in the field of turn-milling and enhance its overall competitiveness. 2021H1 company's operating performance has increased rapidly, and the fundamental inflection point has been established.
The three core issues of the company are as follows:
1. What is the market scale of laser cutting control system?
Benefiting from the processing and strong demand of all kinds of metal and non-metallic parts, the market of laser processing equipment has continued to grow in recent years. It is estimated that the market scale of China's laser equipment will reach 77 billion yuan in 2021, of which the market scale of laser cutting equipment will reach 19.7 billion yuan, and the sales volume will reach 72000 units in 2021. Motion control system is the "brain" of laser equipment. We estimate that the market size of laser cutting control system is 1.342 billion yuan in 2020, and it is expected to reach 3.723 billion yuan in 2025. The growth rate of high-power system is even faster.
2. What is the prospect of the company's market share of laser products?
Bai Chu Electronics is the leader of the domestic laser cutting control system, estimated in 2020 Bai Chu Electronics low-power market share of 70%, high-power market share of 15%. At present, there is little difference in product structure, control precision and speed between Weihong laser cutting system and Baichu. Through deep cooperation with head customers to make differentiated products, the company achieved achievements in product research and development and customer development in the first half of 2020. The market share of medium and low power has been increased to about 20%, and the high power products of 1-20,000 watts have also entered the trial stage. We believe that the share gap between Weihong and Baichu is expected to continue to narrow. It is expected to occupy a larger market share in the future.
3. How is the growth of Nanjing subsidiary?
Nanjing opens the motion control system of positioning CNC machine tools. In August 2021, the SASAC meeting emphasized scientific and technological innovation, and the "industrial mother machine" ranked before the "high-end chip". In recent years, the numerical control rate of machine tools in China has improved rapidly, but there is still a large gap compared with developed countries, and the localization rate of high-end CNC machine tools in China is low. We believe that high-end CNC machine tools are essentially industrial software, especially CNC systems, and the localization of CNC systems is the key to the localization of high-end CNC machine tools. After the acquisition and opening of Nanjing, Weihong empowered products and R & D, developed in the direction of high-end, and has a broad space for growth.
Profit forecast and investment advice: taking into account the growth of the company's laser cutting field and the subsidiary Nanjing KaiTong in the field of CNC machine tools, we estimate that the company's revenue in 2021-2023 will be 439x819 million yuan, respectively. Net profit is 1.68 trillion yuan, the target market capitalization is 9.2 billion yuan in 2022, and the target price is 101 yuan, giving the "buy" rating for the first time.
Risk hints: the industry boom is not as good as expected; laser cutting product research and development and customer expansion are less than expected industry competition; forecasting assumptions are subjective; the company's stock price has the risk of abnormal fluctuations in the near future.