Performance is growing steadily, and a global business layout is being developed. The company has been deeply involved in precision manufacturing technology for more than 20 years, and is one of the few domestic enterprises in the entire bearing and precision parts industry chain covering precision forging, tubing, cold forming, machining, heat treatment, grinding and assembly. The company's main bearing business is outstanding, and it is a leading bearing manufacturer in China. The company focuses on investment in technological reform, transformation and upgrading, and has strong independent innovation capabilities. The company's bearing pre-grinding technology has reached the world's advanced level.
The company's operating income and net profit from 2017 to 2022 grew at a CAGR of 22.80% and 8.40%, respectively, with steady growth. The company is gradually expanding its global footprint through the establishment of overseas subsidiaries and the acquisition of overseas companies. By investing in a plant in Mexico in North America and mergers and acquisitions of FLT companies in Europe, the company began a transformation and upgrading from a simple globalization of trade to a global allocation of resources.
The development of the robot industry is driving the domestic replacement process for high-end bearings and ball screws. The company pays close attention to the development trend of the robot industry and accelerates the downstream market development of robot bearing-related businesses with the advantages and technical reserves of the entire industry chain. In May 2023, the company successfully developed RV reducer bearings and harmonic reducer flexible bearings. Among them, RV reducer bearings and harmonic reducer bearings were sent samples to many well-known domestic robot reducer enterprise customers. Currently, two products have passed customer tests and are being developed simultaneously with supporting customers. At the same time, the company has carried out in-depth technical exchanges with mainstream robot system suppliers in the fields of robot bearings, roller screws, ball screws, etc., and strives to achieve breakthroughs and deliver relevant samples in the second half of 2023. The company will focus on tracking the technological development routes of downstream robot customers and end users, and take product development in related fields as a key direction for future development.
Non-public offerings focus on wind power and new energy vehicles, and are expected to become a new profit growth point. Wind power field:
In October 2022, the 6 MW and 7 MW spindle bearing rollers for offshore wind power produced by Wuzhou Xinchun Group for Shaft Research Technology were successfully mass-produced at the group's roller branch and used in the spindle bearings on Dongfang Electric's 6 MW and 7 MW offshore wind power fans. New energy vehicle field: The company actively responds to the rapid growth of new energy vehicles, successfully develops a full range of bearing products for new energy vehicles, and supports domestic and foreign mainframe customers. The total capital raised by the company in '22 is no more than 540 million yuan. It plans to invest in precision bearing roller technical improvement projects for wind turbines with an annual output of 22 million pieces of 4 megawatts (MW) or more, technical improvement projects for new energy vehicle bearings and components with an annual output of 10.2 million pieces, and intelligent manufacturing and construction projects for automobile thermal management system components and 5.7 million household air conditioning pipelines with an annual output of 8.7 million pieces. As the production capacity of fund-raising projects continues to increase, the company's profitability and industry competitiveness will be further enhanced.
Profit forecast and investment recommendations: We expect the company to achieve revenue of 34.34, 41.96, and 5.031 billion yuan, yoy +7.3%, +22.2%, and +19.9%; net profit of 1.60, 2.29, 331 million yuan, yoy +8.5%, +42.8%, and +44.7%; corresponding PE is 49.18, 34.45, and 23.81X respectively. First coverage, giving a “buy” rating.
Risk warning: Production capacity falls short of expectations, new product development falls short of expectations, and customer development falls short of expectations.