Main points of investment:
China's leading washing machine deceleration clutch manufacturers, supporting downstream leading companies. The deceleration clutch is the core component of the fully automatic wave wheel washing machine and the double drive washing machine. The company has entered Haier's non-competitive bidding (exclusive supply) procurement product series by virtue of the self-developed integration of dual-drive, dual-wheel deceleration clutch and direct-drive motor deceleration clutch. By the end of 2016, Haier and Midea's (Little Swan) washing machines accounted for about 95% of the company's revenue. The stable cooperative relationship between the two sides and the qualified supplier system will help the company to continue to benefit from the dividend brought about by the increase in the concentration of the downstream washing machine leading market.
The volume of double-drive reducer can be expected for high growth in the future. Compared with the traditional wave wheel washing machine, such as high winding and wear, high energy consumption and low cleaning ratio, the company's exclusive dual-drive washing machine has the advantages of high cleaning ratio, low energy consumption, water and electricity saving. As the fourth type of washing machine exclusively developed by Haier (different from drum, wheel and stirring), the dual-drive washing machine currently accounts for only about 6% of the domestic sales in the industry. With the core technologies such as direct drive frequency conversion and centrifugal force, it is expected to play an important role in product differentiation in the process of increasing duopoly concentration of washing machines, and there is still room for substantial improvement in the future. The company's 2016 deceleration clutch sales of 4.29 million sets, an increase of 77% over the same period last year, the company relies on downstream leading machine manufacturers demand pull, sales are expected to usher in substantial growth.
Drum technology reserves rise abruptly based on accumulated strength. According to patent exchange statistics, the company currently has 276 patents, of which invention patents and invention licenses account for 45%, far exceeding competitors in the same industry in quantity and quality; except in the field of dual power, the company has accumulated 22 and 82 patents for drum and wheel parts respectively. In terms of application time, the company has increased the number of invention patents (113) and utility model patents (96) since 2015, and the company has increased its research and development of core components technology patents for drum washing machines. by solving the pain points of drum heating and washing, high energy consumption and difficult cleaning, the company is expected to benefit from the industry opportunities brought about by the growth of drum washing machine sales in the future.
With the extension of core technology, the market space of robot reducer is broad. Relying on the technical advantages of deceleration clutch, the company quickly enters the field of robot RV reducer, and has obvious advantages in business layout. According to CGII data, the new demand for industrial robot reducers in China is expected to exceed 330000 units (+ 70%) in 2017, and the market size is expected to reach about 2.5 billion yuan (+ 60%).
The reducer, which accounts for the highest cost of industrial robots (36%), is expected to benefit from the high growth brought about by the localization of robots. The Julong Robot Company established by the company has successfully sent samples to support the top three companies of domestic industrial robots to achieve small-scale mass production of robot reducers; in addition, the company has accelerated the cooperative layout of the upper and lower reaches of the industrial chain. Guangzhou Qifan Industrial Robot (the top three domestic ontology manufacturers) to set up a joint venture to power the core parts of the industrial robot, the possibility of success is high.
Coverage for the first time, giving a "overweight" rating. The rapid growth of dual-power washing machines and the trend of high efficiency and energy saving have led to the rapid growth of integrated devices. It is estimated that the company's 2017-2019 net profit is 0.87,1.28 and 151 million yuan, EPS is 0.44,0.64 and 0.76 yuan respectively, corresponding to the dynamic price-earnings ratio of 29 times, 20 times and 17 times. As a leader in the domestic mid-and high-end washing machine deceleration clutch industry, the company can expect profits from production capacity in the future, giving a "overweight" rating for the first time.
Risk tips: raw material costs rise, downstream customers develop new suppliers.