In recent years, with the accelerated introduction of national policies to support data development, the digitization of data and industry has become a new driving force for the high-quality development of China's national economy. Data elements have empowered Yuanda Housing to industrialize and upgrade prefabricated buildings:
In the information age, data has gradually become the core competitiveness of the industry
In 2020, the country further introduced a more detailed industrial digital development strategy. As data becomes a new factor of production, it is necessary to focus on cultivating the data element market to ensure the development of the factor data market. The industry value added growth rate of data-intensive industries is significantly higher than that of non-data-intensive industries. We believe that the scale effect of the digital economy has driven the industry to achieve rapid development.
We believe that in the new stage of development, investing in the digital economy will help companies better analyze the market and optimize their own efficiency. Companies that are the first to increase investment in information elements in the construction industry can also seize the opportunity, thus leading the industry into a new era. Judging from the R&D data of listed companies in the construction industry, Yuanda Housing's R&D expenditure accounts for a high proportion of revenue, which is higher than the industry average. The company's continuous R&D and digital upgrades have laid the foundation for the rapid expansion of its PC component business and the formation of a leading edge in the prefabricated industry.
PC MAKER: Intelligent design helps optimize overall efficiency
PC manufacturers improve design interactivity and optimize design processes; compared to other BIM software, they have better function integration capabilities, and the uniformity of service subsequent production processes and usage. Based on the integrated development of data from more than 1000 projects at Yuanda, data collection, data utilization and data sharing continue to be carried out in PC Maker software, forming a virtuous cycle and further optimizing development.
PC Maker serves strategic customer product development and promotes strategic customer cooperation and upgrading. As of September 2020, overall prefabricated construction solutions have been provided to nearly 300 customers including Vanke, Country Garden, Evergrande, Jinke, and Jindi, and has established cooperative relationships with 9 of China's top 10 real estate developers and 8 of China's top 10 construction companies. Yuanda has successively signed strategic cooperation agreements with Country Garden and Jinke Real Estate Market to achieve the transformation from business cooperation to standard joint construction, and accelerate the transformation of prefabricated buildings towards standardization, digitalization and intelligence on the product side.
The PC Maker software application reduces the time required for the company's individual design process and improves design accuracy. Due to improved design process efficiency and design accuracy, the company can attract customers and effectively control the cost of the design process and subsequent manufacturing processes. Optimizing prefabricated design by PC manufacturers can effectively control material costs, mold cost allocation, transportation costs, and construction and lifting costs in PC component costs by improving design accuracy, controlling raw material transportation costs, and improving mold utilization and component standardization.
PC-CPS: Smart Manufacturing Achieves Excess Profits
The PC CPS system realizes key data sharing and collaboration in all aspects of the life cycle of prefabricated buildings through the nine major modules of market, construction, product, technical engineering, production, supply chain, manpower, finance, and construction, realizes the transformation from the original supply-side planning and command production to demand-side data-driven production, reduces manual intervention, and improves production efficiency.
Through supply chain optimization, PC-CPS is automatically driven by one-code data to improve the overall production efficiency of PC factories and achieve intelligent manufacturing of PC components. Labor costs are controlled through intelligent production and increased per capita daily production capacity; the demand side drives the production side, increases inventory turnover, and reduces inventory costs; CPS intelligent plant selection, production and grand joint planning enable reasonable transportation arrangements within an efficient transportation radius to control transportation costs. Complex information flows in physical space are digitally collected and applied in PC CPS. Data has become a new production factor, emphasizing the use of data self-driving and data mining in actual production.
Compared with other companies' information platforms, Yuanda Housing's PC-CPS intelligent manufacturing system has a more complete overall design and better collaborative effects. As the company further increases investment in R&D, the company's leading position in intelligence in the field of prefabricated equipment will still be obvious in the future.
Investment advice: Yuanda develops PC Maker software and PC CPS to improve its productivity and cost control capabilities. At the same time, Yuanda took the lead in realizing the importance of data elements and took the lead in the process of intelligent assembly throughout the process.
We are optimistic about the excess profits and continued competitiveness that can be brought about by ambitious investment in R&D. We will maintain our EPS at RMB 1.81, 2.37, and 3.30 RMB per share in 2020-2022, maintain our “buy” rating, and maintain our target price of HK$41.09.
Risk warning: increased risk of industry competition; risk of R&D investment not getting the expected results; management risk of investing in joint plants; the spread of the epidemic exceeding expectations