Faucet of auto parts, double ring transmission (002472. SZ) surged nearly 300% during the year

Since the beginning of October, the auto parts sector has risen gratifyingly, with the sector index rising 30%, and related concept stocks have repeatedly reached new highs. Among them, there is a single stock that is very eye-catching, that is, double ring transmission (002472. SZ）。

Since 2021, the stock price of double-ring transmission has repeatedly reached new highs, with a total increase of nearly 300%, compared with the increase of other companies in the same industry, it has a sense of "a glance at the mountains and small".

New energy vehicles are booming, and demand for gears is growing

According to the data, Double Ring Transmission is a leading company in the domestic automotive gear industry, and itself is a low-key parts manufacturer, why is the stock price soaring?

In fact, there are two aspects of the core logic, one is the domestic replacement of the gear industry, and the other is the high prosperity of the new energy vehicle acceleration gear.

After the short-term disturbance of the epidemic, the year-on-year sales growth rate of the automotive industry in April 2020 turned from negative to positive, ending a continuous 21-month decline, and the year-on-year sales growth rate in the second half of 2020 reached 12%. The rebound in sales in the automotive industry has driven a sharp recovery in demand for automotive gears. According to the forecast of the China Automobile Association, in 2021, the national automobile sales will reach 26.3 million units, and Founder Securities estimates that the size of China's automotive gear market in 2021 may reach 54.9 billion yuan, an increase of 3.92% year-on-year.

It is worth mentioning that in recent times, in order to achieve cost reduction and efficiency increase, domestic automobile OEMs have actively promoted the platform-based and modular production model, focused on the research and development and design of core components, and outsourced the generalized parts assembly to parts suppliers.

Therefore, the recovery of the automotive industry has accelerated the localization of the gear industry. According to the research report analysis of Founder Securities, double-ring transmission has the ability to mass-produce 3-8 precision gears, which basically meets the needs of high-end customers and has obvious technical advantages in China. As the world's largest manufacturer of gear components, the scale effect is significant, and it has a price advantage over foreign brands.

On the other hand, the production and sales of electric vehicles have increased significantly this year, and the market has continuously raised expectations. In addition to the traditional OEMs announcing the transformation to new energy vehicles, new players such as Apple, Xiaomi, and OPPO have successively entered this most certain trillion-level market.

Under the wave of automobile electrification, the motor replaces the engine as the power output system of the car. Due to the high speed of the motor, higher requirements are put forward for the accuracy of the gear. The new car-making forces tend to be more external rather than self-made.

Dongxing Securities believes that high-speed motors require a high-speed, large-ratio and small reducer to match. The gear accuracy requirements of the reducer are higher than those of the automatic transmission, and the average accuracy reaches more than 4 levels. The double ring transmission is one of the few enterprises in the market that can stably produce 4-stage precision gears in large quantities, and is expected to win more market share in the field of electric drive gears.

Chen Haixia, secretary of the board of directors of the company, believes that the current competitive pattern between new energy vehicle companies is not yet clear, and the new forces of car manufacturing are more inclined to outsource in electric drive systems or gear parts for various reasons, and the company's customer groups cover both traditional car companies and new car manufacturers. At present, the customers of double-ring transmission in the field of new energy vehicles in China include Weilai, BYD, GAC, BorgWarner, Huichuan Technology, etc.

The leader of the automotive gear industry, the performance ushered in an inflection point

The history of double ring transmission can be traced back to 1980, in the gear industry for 41 years, the company is a typical Jiangsu and Zhejiang family business, the major shareholders, Chen Juhua, Wu Changhong, Chen Jianfeng and Jiang Yiqing as a consistent actor, is the actual controller of the company, directly holding 17% of the company's shares, the company's major shareholders are relatives.

In the revenue structure, more than 80% comes from gears, mainly commercial car gears, passenger car gears, construction machinery gears, etc., and the remaining revenue comes from reducers, etc., accounting for less than 20%.

The performance growth of double ring transmission has been very stable, quoting a chart of Zheshang Securities, it can be seen that the company's revenue scale has been growing steadily, in 2018, 2019, the downstream automotive industry declined in the background, the company is still growing against the trend.

In 2020, the company still achieved double-digit revenue growth under the negative impact of the epidemic. In 2021, we will benefit from the downstream demand side and the rapid growth of revenue. For a parts supplier, it is very rare.

It is worth noting that the company's net profit has declined in previous years. This is related to the company's capital expenditure rhythm, after 2018, a large number of fixed assets and projects under construction have been consolidated, increasing depreciation expenses, to some extent swallowing up profit performance, while the rise in commodity prices that began in the second half of 2020 has also caused certain cost pressure on the company.

However, it is precisely because of the company's large capital expenditure in previous years, this year's production capacity began to be released on a large scale, the boom of the superimposed gear market picked up, the rise of new energy electric vehicles, and the synchronous resonance of multiple factors, which promoted the company's net profit to increase significantly.

On October 27, Shuanghuan Transmission announced the third quarter report of 2021, in the first three quarters, the company achieved operating income of 4.066 billion yuan, an increase of 65.3% over the same period of the previous year; in the same period, the net profit attributable to shareholders of listed companies rose by 1439% to 227 million yuan.

At the same time as the performance is gratifying, the company is speeding up and continuing to expand its production capacity.

On October 27, Shuanghuan Transmission announced that it plans to raise no more than 2 billion yuan to invest in six projects, including high-precision new energy vehicle transmission gear digital intelligent manufacturing and construction project, commercial vehicle automatic transmission gear component digital intelligent manufacturing construction project, high-speed and low-noise transmission component laboratory project and supplementary working capital.

Previously, on October 19, the double-ring transmission subsidiary signed a supply agreement with Citroen's subsidiary company for 3.554 billion yuan for new energy. This is also the first time that the company has obtained a new energy vehicle power system gear project directly exported overseas.

"The biggest significance of this cooperation is that the overseas market has been expanded, the products supplied by the company are a lightweight hybrid gearbox, the technical requirements are relatively high, and the stability of the company's batch supply is also valued by customers." Follow-up companies will continue to increase their efforts to expand overseas markets. Relevant people in the company said.

It is reported that the project will be officially put into operation in the fourth quarter of 2022, and will begin to climb the slope in 2023, and will reach the peak annual output in 2024 and continue until 2028, and the total sales amount is expected to be about 3.554 billion yuan during the life cycle of the agreement.

At present, the pattern of double-ring global supply has begun, and the company is making every effort to accelerate the process of globalization.

Conclusion ——

As an upstream parts company, Double Ring Transmission has performed steadily. Since 2021, with the domestic substitution of gears and the wave of electrification of automobiles, the company's performance is in a period of explosive growth.

Interestingly, the slogan on the periphery of the double-ring drive company is "better, much better", and this slogan is often a reflection of the corporate culture. From this point, it can also be seen that the company advocates a pragmatic and refined culture, which is also in line with its "human design" of more than 40 years of deep ploughing gear subdivision tracks.

This article originated from Caihua Network