Investment Summary:
Based on the middle reaches of the sword refers to the downstream. The company's two main businesses are automation equipment and auto parts.
The two main industries will usher in sustained high growth in the future.
First, the automation equipment business is the main business of the company.
Relying on first-class technology and excellent product quality, and taking import substitution as the market entry point, the company has achieved a high market share in many segments of the market. Without the impact of the epidemic, the company's revenue in the automation equipment sector rose from 82 million yuan to 390 million yuan in 2012-2019, with an average annual compound growth rate of 25%.
The automatic equipment track is wide and long. With the accelerated development of automation industry catalyzed by the aging population and rising labor costs, the application of industrial robots in China is still at a low level, and the density of industrial robots is only about half of that of Japan, Germany and the United States. however, China is the fastest growing market for industrial robots. The growth level of the company's automation equipment business is positively correlated with the industry growth level, and the company's automation equipment business growth level is obviously better than the industry average.
Second, the company completed the acquisition of Shanghai Zhongyuan in 2018 and added new auto parts business.
After the completion of the acquisition, the company carried out a large-scale automation upgrade to Shanghai Zhongyuan, which improved the production capacity and profitability of Shanghai Zhongyuan, and strengthened the position of the main supplier of engine components such as fuel distributor in customers. At the same time, the company also assists Shanghai Zhongyuan in actively laying out the R & D and production capacity construction of parts related to the thermal management system of new energy vehicles. The company's auto parts business income was 410 million yuan in 2019 and 460 million yuan in 2020, with an average annual compound growth rate of 30.5% in 18-20 years.
Automotive electrification and intelligence will promote the rapid development of automotive electronics. Bosch, the company's core customer, has a market share of about 12% in the domestic automotive electronics market, ranking first in China, so the company is expected to obtain growth orders for automotive electronic automation equipment from Bosch.
The company's spare parts business will usher in volume growth. The company's auto parts business mainly includes three major products:
Fuel distributor, fuel pipe and cooling water pipe. Under the background of the implementation of the sixth national standard, the company comprehensively launched the national sixth engine supporting high-pressure fuel distributor and high-pressure oil pipe products. The unit price of the sixth standard fuel distributor is 141.65 yuan / piece, which is 77.6% higher than the national five standard products. The full implementation of the sixth standard is expected to lead to a substantial increase in the company's spare parts business revenue.
Carbon dioxide high-pressure pipe orders will rise with the climbing of MEB production capacity. Carbon dioxide heat pump air-conditioning is the future technology trend, the company developed carbon dioxide high-pressure pipeline system (refrigerant conduit) in advance, has passed the experimental certification of Volkswagen MEB, and entered the stage of capacity construction and preparation for mass production. This business is expected to greatly improve the company's profitability in the future and become the fourth largest support for the spare parts business.
Investment suggestion: we forecast that the company's revenue from 2021 to 2023 will be 973 million yuan, 1.2 billion yuan and 1.502 billion yuan respectively, with corresponding annual growth rates of 26.97%, 23.31% and 25.24% respectively, and the net profit of returning home will be 157 million yuan, 197 million yuan and 258 million yuan respectively. The corresponding EPS is 0.6,0.75 and 0.99 yuan per share respectively. The current stock price corresponds to 51 times, 41 times and 31 times PE from 2021 to 2023, respectively. Give Clay Electrical and Mechanical Buy rating.
Risk hints: 1) the risk of the impact of macroeconomic cyclical fluctuations; 2) the risk aggravated by industry competition; and 3) the lower-than-expected risk of payback.