Main points of investment:
Juyi Technology is a leading supplier of intelligent equipment and motor electronic control parts in China, with technological innovation as its core competitiveness. The company's intelligent equipment business mainly provides automobile body-in-white, powertrain and power battery production lines; at the same time, the company provides motor electric control products for the mainframe factory, which is the core parts supplier of new energy automobile powertrain. Technological innovation is the core competitiveness of the company. With years of continuous large-scale R & D investment, the company has obtained a total of 658 patents and 149 software copyrights. Customers include Volkswagen, Tesla, Inc., Geely, Great Wall, NIO Inc., BYD and other mainstream automobile brands. At the same time, the company is located in Hefei, the "capital of new energy". With the establishment of local new energy industry clusters, it is expected to continue to expand customers.
Intelligent equipment: under the wave of new energy, the company's equipment business has benefited from all aspects, and the demand for orders is strong. The company has international competitiveness in lightweight car body connection technology, and has been recognized by customers such as Jaguar Land Rover and Tesla, Inc. in the UK; the company has mastered a number of key core equipment manufacturing technology for powertrain, and new energy has further driven the demand for powertrain production line renewal; at the same time, the company has further expanded from the field of automobile production line and made a breakthrough in the field of power battery. Generally speaking, the company has strong technical capability in the field of intelligent equipment and benefits from multi-business under the wave of new energy. In the first half of 2022, the company added 2.22 billion yuan in new orders, + 67% of the same period last year, and the cumulative on-hand orders reached 5.57 billion yuan, + 69% of the same period last year. Sufficient orders provide a guarantee for subsequent growth.
Motor electronic control parts: customers expand gradually, profitability continues to improve. We estimate that the electric drive market for passenger cars will reach 77.5 billion yuan in 2024, and CAGR will reach 56% in three years, while third-party suppliers like the company are expected to increase their market share by virtue of the advantage of scale. In terms of competitiveness, the company caters to the industry trend and has a technology reserve layout in the direction of integration, high voltage, flat line and SiC application, and the coordination of two-wheel business also provides a unique competitive advantage. The early customer structure of the company is relatively concentrated, but with the gradual release of new fixed points since the beginning of this year and the gradual landing of 500000 new sets of production capacity, we expect that the company's shipments will continue to increase, leading to the upgrading of the company's product structure and the improvement of profitability.
The strategic characteristics of "two-wheel drive" form a unique competitive advantage for the company. The company adheres to the two-wheel drive development strategy of intelligent equipment and motor electronic control business, which on the one hand helps the company to understand the development and change trend of the industry in advance, and makes clear the direction of strategic transformation and upgrading; on the other hand, the knowledge and technology accumulated by equipment and customer resources can be well introduced into the parts business; at the same time, the business coordination on the production side forms support for the company in terms of manufacturing cost and customer response. In the field of motor electric control with high-speed and iterative product technology, "two-wheel drive" provides a unique competitive advantage for the company to continuously promote innovative research and development and meet market demand.
Investment analysis opinion: the company has sufficient technology accumulation and customer resources formed by the deep ploughing industry for many years, and has the unique advantage of "two-wheel drive". It superimposes the industry β of the rapid development of new energy and is optimistic about its sustainable growth ability. We estimate that the company's operating income from 2022 to 2024 will reach RMB 32.9 million, representing a year-on-year growth rate of 55%, 59%, 37%, and a net profit of 1.7%, 3.0%, 5.0 million yuan, with a year-on-year growth rate of 30%, 79%, and 64%, and the current stock price PE is 38x/21x/13x. Give it an average of 26 times PE of comparable companies in 2023, corresponding to a target market capitalization of about 7.89 billion yuan, a 23% increase over the closing market value of 6.42 billion yuan on December 7, 2022, covering it for the first time and giving it a "buy" rating.
Risk hints: industry overcapacity risk, project implementation risk, new energy vehicle sales are not as expected, business development is not as expected.