Key points of investment
A benchmark enterprise for molding equipment; net profit CAGR = 20% from 2013 to 2023. The company has been deeply involved in the industry for 22 years, focusing on the production, research and marketing of special machinery and equipment for molding. The main business is injection molding machines, die-casting machines, and rubber injectors. It is widely used in the fields of home appliances, automobiles, 3C, packaging, etc., and is an important industrial mother machine in the field of industrial manufacturing. In 2023, the above businesses accounted for about 67%, 19%, and 4% of revenue, respectively.
Through the industry cycle, financial data is impressive. The CAGR of the company's operating income and net profit to mother in 2013-2023 was about 15% and 20%, respectively. In 2013-2023, the company's gross sales margin remained at 31%-38%, the leading level in the industry.
Injection molding machine industry: The boom in the cyclical industry is improving, and the company is expected to use multiple advantages to increase market share and achieve steady growth in the injection molding machine industry. China is showing a “one super many strengths” competitive pattern. According to Grand ViewResearch, the global injection molding machine market was nearly 100 billion yuan in 2022, and CAGR = 4.6% in 2023-2030.
The domestic injection molding machine industry market size in 2022 was about 26.35 billion yuan, and CAGR = 4% in 2016-2022. The domestic injection molding machine industry market is expected to reach 31.08 billion yuan in 2026, with CAGR = 4% in 2026. From a global perspective, leading Japanese and European manufacturers occupy the high-end market with their experience; from a domestic perspective, it presents a “one super many strengths” pattern with Haitian International as the lead and Yizumi and Zhenxiong Group as the second tier.
With its product, brand, operation and sales advantages, the company is expected to increase its market share. 1) Product: The company's product matrix has been perfected, and full coverage of two-board, three-board and full-motor products has been achieved; 2) Brand: The product quality structure has a large customer base, including high-quality enterprises such as Wanhe Electric, Great Wall Motor, Little Bear Electric, BYD, FAW Group, etc.; 3) Operation: The company continuously optimizes its operating capacity, and its profitability is superior to its peers; 4) Sales: It mainly uses a direct sales model different from peers, which is closer to customer needs and responds in a timely manner.
Die-casting machine industry: Cycles and growth resonate. Integrated die casting is expected to become the mainstream process in automobile manufacturing. Under the wave of new energy vehicles, the amount of aluminum and magnesium used in bicycles continues to increase, and China's die-casting machine industry is developing rapidly.
In 2017-2021, the market size of China's die casting machine industry grew from 10 billion to 17.5 billion, with a CAGR of about 31%; the market size of China's die casting machine industry is expected to exceed 30 billion in 2025. Well-known Japanese and European manufacturers occupy part of the high-end market, and domestic manufacturers have basically achieved import substitution due to their cost performance advantages.
Integrated die casting is expected to become the mainstream process in automobile manufacturing due to its advantages of high efficiency, low cost, and light weight.
It is estimated that in 2025, the penetration rate of integrated die-casting for new energy passenger vehicles in China will reach 15%, 31%, and 35%; the integrated die-casting market will reach 18.1 billion yuan, with a CAGR of about 138% in 2023-2025. The company laid out integrated die-casting ahead of schedule, which is expected to benefit from the subsequent explosion of the industry. The successful delivery of the company's oversized die-casting machine LEAP 7000T to Changan Automobile in 2023 is an important milestone in the company's integrated die-casting field.
Profit forecasting and valuation
The company's net profit for 2024-2026 is expected to be 0.61, 0.73, 0.9 billion yuan, up 27%, 20%, and 24% year over year, corresponding to PE 16, 13, and 11X. First coverage, giving a “buy” rating.
Risk warning
1) The recovery of the manufacturing industry fell short of expectations; 2) R&D and technological breakthroughs fell short of expectations; 3) Raw material prices rose.