Investment highlights
For the first time, it covered Mingzhi Electric (603728) to outperform the industry, with a target price of 51.00 yuan. The company is an excellent company in the field of industrial control and humanoid robots. Based on the forward valuation discount method, it was given a price-earnings ratio of 35x in 2027. The reasons are as follows:
The company is the world's leading HB stepper motor company. The company started with HB Stepper Motor and further enhanced its competitiveness through epitaxial acquisitions on the basis of its own continuous iteration. A series of acquisitions of AMP, Lin, traffic control electronics, and T motion not only helped the company improve stepper drives, integrated stepper servo technology, and 0.9° high-end stepper motors, but also helped the company increase production capacity levels and open up high-end markets such as European and American security and medical care. The company's HB stepper motor production reached 18 million units in 2022, and the global market share is stable in the top three.
The product layout is diverse, and the industry has blossomed more. 1) Product side: The company expands product categories horizontally and lays out vertically across hierarchical levels. The company continues to iteratively consolidate stepper motors while expanding into servos, hollow cups, brushless motors, linear modules, etc. Looking vertically, the company is based on motors and extends to the drive layer and control layer to provide system-level solutions for various fields such as industrial automation and medical care. 2) Industry side: The company continues to break through growing industries. We can see that the company's emerging industries accounted for 20-30% from 2017 to 50-60% in 2022. Growing industries continue to contribute growth momentum to the company.
Industrial control overseas has become an important development trend. In recent years, as the localization rate of the local market has increased, manufacturers have continued to actively deploy overseas. The overall overseas market space is broad and profitable, and going overseas has become an important trend. Judging from the level of going overseas, the motor at the executive level is the first product to go overseas. The overall market for global stepper motors is relatively stable. The pattern of leading manufacturers has been determined, and Ming Zhi is already the world's leading manufacturer of HB stepper motors.
Humanoid robots open up space to grow. The hollow cup motor has the characteristics of high efficiency, fast speed, fast response, etc., and has good dynamic performance, control performance, etc., which fully meets the needs of dexterous hands.
A single humanoid robot is equipped with 12 hollow cup motors, and the overall commercialization of humanoid robots is expected to gradually increase.
What is our biggest difference from the market? The market is often concerned about the competitive pattern of generating long and hollow cup motors within the company. However, we believe that in recent years, the company has fully demonstrated its competitiveness in servos, micro precision drives, etc.
The company has leading hollow cup motor technology, wide coverage and module capabilities, and its advantages are still quite obvious.
Potential catalysts: The commercialization of humanoid robots has exceeded expectations, and industrial control has exceeded expectations.
Profit forecasting and valuation
We expect the company's 2023/24/25 EPS to be 0.34/0.65/1.02 yuan, respectively, and a CAGR of 63.8%.
For the first time, coverage was given an outperforming industry rating. The forward P/E valuation method was used. Assuming that the company's net profit in 2023/24/25 was about 1.4/27/430 million yuan, and the 2027 net profit was 80 million yuan, and 35 times P/E was given, corresponding to a fair value of 28.8 billion yuan in 2027. Assuming an equity capital cost of 10.4%, it is estimated that the fair value in 2024 is about 21.4 billion yuan, corresponding to a value of about 51 yuan per share. There is room for a 5% increase from the current stock price.
risks
Demand fluctuates, industry competition intensifies, robots fall short of expectations, exchange rate fluctuations, and overseas policies exceed expectations.