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The economist Keynes once proposed a "beauty pageant theory" about stock market prices. He believes that the price of an asset does not depend on the intrinsic value of the asset, but on whether people think it has value.
According to the data of the China Automobile Association, the production and sales of Chinese automobiles in 2021 will remain the first in the world. The profit of automotive aftermarket services accounts for about 70% of the industry, and there is still a large value to be tapped as a whole.
Among them, Yuanzheng Technology is a company that has produced automobile testing and maintenance equipment for nearly 30 years, and its main products are sold to maintenance plants. A few years ago, the company released Golo, an online diagnostic device with the intention of seizing access to the Internet in cars, and the story swept up a storm in the secondary market.
Historical stock price of Yuanzheng Technology (Source: Futu Niuniu)
On March 31, Yuanzheng Technology announced its 2021 results, in the case of repeated epidemics and continuous supply chain problems, the company turned a profit last year, how did it achieve profitability? What more story can it tell in the automotive aftermarket?
The automotive aftermarket is "sit-ups", and Yuanzheng Technology focuses on cost reduction and efficiency increase
The so-called automotive aftermarket refers to the market generated around all aspects of the after-sales use of automobiles in the process of automobiles from sale to scrapping, and the automotive aftermarket is affected by the prosperity of the automotive industry to a certain extent. Yuanzheng Technology is mainly engaged in automobile testing and maintenance equipment, and is one of the participants in the automotive aftermarket.
The prosperity of the automotive aftermarket is closely related to automobile sales. According to QuestMobile data, car sales in 2021 were 20.146 million units, up 4.4% year-on-year.
Source: QuestMobile
In the case of a slight recovery in automobile sales, most of the companies that operate testing and maintenance products have achieved positive growth. According to the financial report disclosed by Yuanzheng Technology, its revenue in 2021 was 1.345 billion yuan, an increase of 26% year-on-year, and peers Daotong Technology and Shi Naibao also achieved a certain year-on-year increase in revenue.
The Hong Kong Stock Research Agency believes that the listing of new products may be one of the reasons for the growth of Yuanzheng Technology's revenue. In 2021, Yuanzheng Technology listed tire pressure monitoring sensors, high-end PAD VII automotive diagnostic equipment, cloud diagnosis vehicles and other products.
Taking tire pressure monitoring sensors as an example, the market demand for related products continues to grow. According to Ping An Securities, by 2025, the demand for TPMS tire pressure sensors in the U.S.-Europe and Chinese automotive aftermarkets will exceed 90 million sets, and as the world's largest automotive market, the future demand for TPMS sensor replacement in China's automotive aftermarket has great potential.
In addition to revenue growth, the Hong Kong Stock Research Agency noted that the profitability of Yuanzheng Technology has also improved. In 2021, the company's net profit was 92.388 million yuan, which was a turnaround from the loss of 120 million yuan last year. The main reason is that the cost has been optimized, and the investment in research and development and sales has decreased compared with last year. In the case of performance to achieve a certain growth, cost reduction and efficiency increase have a certain role.
Entering 2022, the market situation of the automotive after-sales service market has ushered in a "turn". Since the first quarter, the problem of rising raw materials has continued, and the epidemic has recurred again, and China's automobile sales in the first quarter fell by 4.5% year-on-year.
At the same time, according to the "Preemptive Edition of the Automotive Aftermarket Briefing in the First Quarter of 2022" released by the F6 Big Data Research Institute, the output value in the first quarter of 2022 fell by 5% compared with last year, of which 11.4% fell in March.
For the automobile testing and maintenance industry, the price increase of raw materials such as chips will also lead to a further increase in production costs, and how to further optimize costs is a key issue.
On the other hand, because the automobile maintenance industry is relatively dispersed by region, there are more market participants, and industry competition will also intensify. The 2021 Provisions on the Administration of Motor Vehicle Maintenance determined that "no unit or individual may block or monopolize the motor vehicle maintenance market, and the repair party has the right to independently select maintenance operators for maintenance." "It may also lead to increased competitive pressure from related enterprises."
Under the double test of demand cost, this will also bring some tests to the performance growth of Yuanzheng Technology this year. But in the automotive industry, new energy vehicles in the sales level to achieve positive growth, in this booming field, how to explore incremental value?
When cars become electronic products, Yuanzheng Technology finds a solution to the problem?
According to the data disclosed by the Domestic Passenger Vehicle Association, in the first quarter, the domestic new energy passenger car retail sales of 1.07 million units, an increase of 146.6% year-on-year, fuel vehicles and electric vehicle sales "scissor difference" continued to expand.
In addition to the increase in sales, compared with traditional fuel vehicles, the degree of electronicization of new energy vehicles has been continuously improved. According to the data of Zhiyan Consulting, the proportion of global automotive electronics in the cost of the vehicle will be close to 50% in 2030, and the car is gradually becoming an electronic product.
Under the trend of electronics, the traditional empirical judgment method is difficult to adapt to the development of modern automobiles, and the dependence of automotive aftermarket maintenance on comprehensive diagnostic tools has gradually increased. It can be said that the growth of demand for "diagnosis, examination and storage" services for new energy vehicles has opened up new space for the automotive aftermarket.
It is reported that Yuanzheng Technology began to lay out electronic and intelligent, and the high-end PAD VII automotive diagnostic equipment and automotive anti-theft programming equipment launched may benefit from the growth of market demand, and give positive feedback on performance in the next few years.
Although the market demand for new energy vehicles has risen, automotive electronics has also brought new opportunities and challenges to the diagnostic business.
According to the view of Guoyuan Securities, the new energy automobile maintenance industry faces three major pain points: first, the maintenance risk is high, and some operations are slightly irregular, there are risks such as thermal runaway and high-voltage electric shock; second, the maintenance efficiency is low, and the current mainstream testing program needs to rely on cyclic charge and discharge to complete the detection of battery packs or battery modules; third, the testing of each depot and battery factory needs various types of special inspection tools, and the lack of special inspection tools brings certain difficulties to third-party maintenance stores.
Compared with the original diagnostic products, the general-purpose diagnostic analysis products of Yuanzheng Technology have compatibility and price advantages, and the maintenance risk is low. However, these pain points also mean that the market has put forward higher requirements for general diagnostic products, and whether the new products developed by Yuanzheng Technology can become the best choice for maintenance personnel in the case of continuous technological progress in the field of automotive electronics and powertrain needs to be verified by the market.
In addition, the networking of automobiles has become a trend in the development of the automotive industry. "Software-defined car" has become the consensus of more and more practitioners, and the Internet of Vehicles will have more data interfaces as the penetration rate of new energy vehicles continues to increase.
A few years ago, when Yuanzheng Technology launched the earliest Golo product, it wanted to realize the real-time and networking of electronic control system data. The launch of the super remote diagnosis platform and cloud diagnosis vehicle in 2021 shows that it is exploring more application scenarios based on automotive data networks.
In fact, mining the underlying architecture of the blockchain, data processing and automotive applications and other aspects of technological expansion is the main transformation direction of the automotive aftermarket players. New energy and intelligent automobile diagnosis and maintenance need more data and technical support, and the construction of maintenance product manufacturer database and cloud platform ushered in development opportunities.
In 2021, the number of users and reports of Yuanzheng Technology's big data platform has doubled. The number of users increased by 17% year-on-year to about 4.4 million, the platform added 180 million new car diagnostic reports, and received 820 million maintenance diagnostic reports, an increase of 28% year-on-year.
"Data" is one of the core assets of the new economic era, and manufacturers can build more business application scenarios based on data. For example, the car chain platform of Yuanzheng Technology, through blockchain technology, stores data in the cloud and opens it to developers, and has been applied to the scene of sharing cars.
In addition, Daotong Technology is also promoting software cloud services, accompanied by hardware sales or upgrades, such as selling intelligent diagnostic computers and providing corresponding cloud software services.
epilogue
At present, reducing costs and increasing efficiency may be one of the solutions for Yuanzheng Technology to deal with repeated epidemics and supply chain problems. However, only by grasping the trend of automotive electronics and networking and mining new gold mines in the new energy vehicle aftermarket can we find a real way out, which may be the key to the incremental value of Yuanzheng Technology.