The company is deeply involved in the field of precision injection molding. The downstream covers automobiles and home appliances. Customers include Sanhua, Tuopu, Pierburg, A.O., Panasonic, etc. The racetrack competition pattern is good, and the company has strong design ability and fine management ability. Optimistic about the company's capacity expansion+product/customer expansion to drive growth. The first coverage gives an “gain” rating.
Deeply cultivate precision injection parts and molds, and guarantee high profit margins with multiple factors. The company specializes in precision injection parts and molds. The downstream covers the fields of automobiles, home appliances, etc. Automotive customers include Sanhua, Topp, Pierburg, etc., and home appliance customers include A.O., Panasonic, TOTO and Kohler. The company, formerly known as a wholly owned Japanese enterprise, has high technical barriers in the field of precision injection molding, and its competitors are mainly foreign investors; the products have the characteristics of “small batches, multiple varieties” and rely on fine management capabilities; the company has strong design capabilities and self-made molds, which is its core competitiveness. The above factors guarantee the company's high profit margin. In 2023, the company's revenue was 590 million yuan, +10.6% year over year; net profit was 100 million yuan, +9.6% year over year; gross margin was 31.7%, and net profit margin was 17.5%.
Replacing steel with plastic is widely used, and engineering plastics have great potential. 1) The trend of replacing steel with plastic is clear: national policies promote the lightweight development of automobiles and encourage engineering plastics, composites, etc. to reduce the weight of automobiles. Currently, the amount of plastic used in passenger cars in China is about 175 kg. Compared with 200-300 kg in Europe, Germany's 300-400 kg still has a lot of room for improvement. 2) Engineering plastics have a wide range of application scenarios: Because of their strong resistance, adaptability to extreme temperatures and harsh environments, and light weight, they are widely used in the automotive field, and there is room for expansion in robotics, energy storage, etc. According to Frost & Sullivan's forecast, China's automotive parts engineering plastics market will be 64.2 billion yuan in 2026, and the 2021-26 CAGR will reach 6.7%.
Capacity expansion+product expansion to continuously explore new growth points. 1) Production capacity expansion: Production capacity expansion at the Shanghai base, and the construction of a project with an annual output of 800 million sets of NEV parts and ultra-precision engineering plastic parts, with a land area of 164 acres.
2) Value growth: The current value of the company's new energy vehicles is estimated at 100-200 yuan, and it is expected to reach 600-800 yuan in the future, with room for growth several times. 3) Emerging fields: In the field of humanoid robots, we are actively developing precision components with customers; in the field of energy storage, thermal management system components have been designated by leading companies during the market expansion phase, and a small number of shipments are expected in 2024.
The first coverage gives an “gain” rating. The company is a leading enterprise in the field of precision injection molded parts. The competition pattern on the racetrack is good, the barriers are high, and the product is widely used. It is optimistic that the company's production capacity expansion+product/customer expansion will drive growth. Net profit for 2024-2026E is expected to be 150 million/200 million/240 million yuan, respectively, +45.2%/+31.9%/+18.6% year-on-year, corresponding to 21.9x/16.6x/14.0x 2024-26E P/E. The first coverage gives an “gain” rating.
Risk warning: raw material prices fluctuate, customers are relatively concentrated, capacity expansion falls short of expectations, risk of lifting the ban