The company is a leading micromotor company in China and has outstanding advantages in intelligent manufacturing. Drawing on the experience of leading overseas companies, the company has successfully entered promising segments such as new energy vehicles and medical devices through joint ventures and mergers and acquisitions. With the commissioning of industrial servo systems, energy storage water pump products, and the implementation of auto parts projects, the company's revenue has continued to grow in recent years. We believe that the company is expected to achieve increased performance in various business areas, giving the company 25 times PE valuation in 2023, with a target price of 35 yuan, covering the “buy” rating for the first time.
The leading micromotor for domestic household appliances. The company focuses on R&D, production and sales of micromotors and intelligent components. The products are widely used in white appliances, medical devices, automobiles, engineering control and other fields. In 2021, the company achieved revenue of 2,919 million yuan, an increase of 20.52% over the previous year; Guimu's net profit was 244 million yuan, a year-on-year decrease of 10.62%. In the first half of 2022, the company achieved revenue of 1,465 million yuan, an increase of 0.75% over the same period last year, and achieved net profit of 155 million yuan to the mother.
The micromotor market is huge, and the company has technical and customer advantages. China occupies a large market for low-end micromotor products in the world. In 2020, China's micromotor market reached 242.3 billion yuan. The company is deeply involved in the traditional business of home appliance micromotors and components, and has accumulated many high-quality customers such as Gree, Midea, Haier, Hitachi, Sharp, Electrolux, and Whirlpool with advantages such as years of R&D investment, patent layout, and scale effects of intelligent manufacturing. In the future, through the component componentization strategy, the company is expected to gradually increase the value of its products.
Drawing on the experience of leading overseas companies, mergers and acquisitions accelerate the expansion of business fields. The company actively promotes mechatronic integration and modular production and sales methods for motor products, which have been widely recognized by customers. Following the rise path of Nidec, a leader in the motor industry, the company successfully entered high-quality circuits such as new energy and medical care through joint ventures, mergers and acquisitions, etc., combined with its own platform advantages, to accelerate enterprise scale expansion and business field outreach. In 2019, the company acquired Dingzhi Electric and entered the medical device field, with import substitution as its core competitiveness. In 2021, Jiangsu Dingzhi achieved sales revenue of 194 million yuan, an increase of 48.1% over the previous year.
The layout of servo system+new energy vehicle components+energy storage pump opens up room for incremental performance. The company invested 30 million yuan in Changzhou Luoyuan to lay out high-end servo systems. In 2021, Changzhou Luoyuan's revenue was 31.1121 million yuan, an increase of 90.25% over the previous year. The company invested 550 million yuan to build a “new energy vehicle core component production base”. According to the cooperation announcement, it is estimated that the annual sales will be about 700 million yuan after completion. The company's electronic water pump products have entered the energy storage system supply chain for large energy storage customers, and terminal products have been supplied in batches overseas.
Risk factors: Fluctuations in raw material prices; declining popularity of home appliances; new energy vehicle parts projects falling short of expectations; sales of energy storage pump products falling short of expectations and risk of exchange rate fluctuations.
Investment advice: The company's traditional business technology is leading, and new entrants to the racetrack are very popular. Two factors drive performance growth. The company's net profit for 2022-2024 is estimated to be 294/366/473 million yuan respectively, and the corresponding EPS forecast is 1.12/1.40/1.81 yuan. Referring to the average valuation of comparable companies in 2023 (the average PE of Weiguang Co., Ltd., Mingzhi Electric, Hanyu Group, and Collier, Wind agreed), considering the company's industry position and incremental business, the company was given 25 times the PE valuation in 2023, corresponding to the target price of 35 yuan, covering the “buy” rating for the first time.
