Key points of investment
First quarter of 2024: Performance is under pressure in the short term, and we expect human-robot dexterous hollow cup motor emissions 1) Full year of 2023: The company achieved operating income of 2.54 billion yuan, -14.1% year on year; net profit to mother of 140 million yuan, -43.2% year on year; achieved gross profit margin of 37.2%, -1.0 pct year on year; net profit margin 5.6%, year-on-year.
By business, revenue from control motors and drive systems fell 10.7% year on year; power supply and lighting system control revenue fell 26.3% year on year; equipment condition management systems fell 24.4% year on year; and trade agency business fell 26.3% year on year. The company's performance is under pressure in the short term, mainly due to downstream customer inventory removal and base relocation.
2) Fourth quarter of 2023: The company achieved operating income of 630 million yuan, a year-on-year decrease of 25.0%; net profit to mother was 60 million yuan, a year-on-year decrease of 35.3%.
3) First quarter of 2024: The company achieved operating income of 610 million yuan, a year-on-year decrease of 6.3%; net profit to mother was 0.1 billion yuan, a year-on-year decrease of 80.0%.
The micro motor market space is large. The global market size is expected to reach 56.1 billion US dollars in 2030: the global micro motor industry market size will reach 35.85 billion US dollars in 2022, and is expected to reach 56.1 billion US dollars by 2030, and the CAGR is about 6%. China's micro motor market is expected to grow from 102.4 billion yuan in 2018 to 161 billion yuan in 2023, with a CAGR of about 9.5%.
Industry drivers: 1) Overseas development: demand for high-end micromotor products such as high efficiency, energy saving and intelligence will continue to increase in overseas markets; 2) Expansion in new fields: the rise of smart medical devices, new energy vehicles, wearable devices, robots, drones, smart homes, etc. will drive the development of the industry.
Competitive landscape: Japanese companies still dominate. Among them, in terms of HB stepper motors segment, the market is highly concentrated. The top five manufacturers accounted for more than 80% of the global market, with Japanese companies occupying 4 seats. In 2015, the company accounted for about 10% of the global HB stepper motor market, and in terms of PM stepper motors, Japanese companies accounted for more than 65% of the global market share in 2015.
With the rise of humanoid robots, hollow cup motors are expected to usher in new growth space. Take the Tesla humanoid robot as an example. The structure of its hand can be roughly disassembled into a hollow cup motor+screw+sensor. According to Huajing Industrial Research Institute, the global hollow cup motor market is about 5.1 billion yuan in 2022, and the market size is expected to reach 8.3 billion yuan in 2028, with a compound annual growth rate of about 8.5% during the period. We estimate that the demand for humanoid robots will reach 17.72 million units in 2030, driving the hollow cup market space to 13.2 billion yuan. In 2023, the company will proceed with the implementation of the “Brushless Motor New Capacity Project” according to the plan to improve production efficiency and product quality stability through optimization of tooling and automation equipment transformation. Among them, the hollow cup motor family has added various new specification series and supporting speed reducer and encoder products such as ECH6, ECH8, ECH10, ECH13, ECH19, ECT22, and ECT30, and the annual sales scale growth rate has exceeded 80%.
Profit forecasting and valuation
Considering that customer withdrawal continues, and the current recovery in downstream demand is weak, we expect net profit from 2024-2026 to be 210 million yuan, 270 million yuan, and 340 million yuan, respectively, up 47%, 32%, and 27% year-on-year, respectively, corresponding to PE 115, 87, and 69 times, respectively. As a leading domestic micro motor company, humanoid robots are expected to open up new market space and maintain the “gain” rating.
Risk warning: technological breakthroughs fall short of expectations; market demand falls short of expectations; humanoid robots fall short of expectations