(Report producer/analyst: Guosen Securities Tang Xuxia)
Deep cultivation of aluminum alloy die casting, lean manufacturing casts the core competitive advantage
Create a "product supermarket" of automotive aluminum alloy parts, with rich small and medium-sized items
The company's predecessor was Ningbo Unite Die Casting Co., Ltd. established in 2003, later renamed as Ningbo Aikedi Auto Parts Co., Ltd., and changed to a joint stock limited company in 2015 and listed in 2017.
The company's early products mainly revolve around small and medium-sized parts, including aluminum alloy precision die-casting parts for automobile wiper systems, steering systems, transmission systems, power systems, braking systems, etc.
In 2017, the company went public and raised funds for the expansion project of automotive die-casting parts, in 2018, the company adjusted the raised funds for "new energy vehicles and automobile lightweight parts construction projects", began to increase the development of new energy vehicle products, in 2022 public issuance of convertible bonds to invest in the project of Ikedi Intelligent Manufacturing Industrial Park, in 2023 issued a fixed increase plan for investment in Mexico in the production base of new energy vehicle structural parts and three electric system parts.
The corresponding products began to transform from small and medium-sized parts to three-electric products and body structural parts, and the key areas of new product development in 2023 are: new energy vehicle three-electric systems, body structural parts, thermal management system parts, intelligent driving system parts, etc.
The company's vision is "to create hidden champions and create a century-old enterprise", that is, to deepen manufacturing in subdivided fields, and pursue lean management and excellent technology. The company has a complete range of small and medium-sized items such as automobile wiper systems, steering systems, power systems, transmission systems, brake systems, etc., and currently has about 4,000 product varieties, and in 2022, the company will supply more than 200 million aluminum alloy products to the global automotive market (about 302 million auto parts).
Taking the wiper motor housing in the wiper system as an example, according to the information disclosed by the company, according to each vehicle equipped with an wiper motor housing, it is estimated that the sales volume of the wiper motor housing in 2016 is about 35% of the global market share, and the company has not disclosed the latest shipment data, but considering that the company's revenue growth rate is faster than the industry (2016-2022 revenue CAGR=15%), it is expected that the current market share is still more than 30%, which is the leader in this segment.
The controlling shareholder of the company is iKedi Investment, which directly holds 32.51% of the company's equity, and the actual controller of the company is Zhang Jiancheng, who directly holds 8.28% of the company's equity, and indirectly holds 32.51% of the company's equity through controlling iKedi Investment. According to the annual report, during the reporting period, Zhang Jiancheng also indirectly controlled 9.05% of the company's equity by controlling Ningbo Lingxi, Ningbo Lingrong, Ningbo Lingqi, Ningbo Lingxin and Ningbo Lingxi.
Since its listing in 2017, the company has announced five phases of equity incentives, of which the fifth phase has been granted to 646 people, including directors, senior managers, middle and senior managers and core personnel (630 people) serving in the company (including holding subsidiaries), to ensure the binding of the company's core talents.
In 2022, the company's revenue from new energy vehicle products will account for about 20%, and new energy orders will begin to increase
Before 2021, the company's revenue growth rate was flat, and from 2013 to 2022, the company's revenue increased from 1.119 billion yuan to 4.265 billion yuan, with a compound growth rate of 14%; Net profit attributable to owners increased from RMB232 million to RMB310 million, with a compound growth rate of 4%.
In 2022, the company's new energy business orders began to increase, and the sales revenue of new energy vehicle products accounted for about 20% that year, driving the company to achieve revenue of 4.265 billion yuan in 2022, a year-on-year increase of 33%; The net profit attributable to the parent was 649 million yuan, a year-on-year growth rate of 109%. In 2022, the company's newly obtained new energy vehicle project life cycle revenue accounts for 70% of the aluminum alloy die-casting plate, of which new energy body structural parts account for about 5%, new energy three electric systems account for about 40%, intelligent driving system projects account for about 12%, and thermal management system projects account for about 10%, which is expected to drive the company's performance to continue to grow.
In 2022, the company's sales gross profit margin will be 27.77%, +1.45pct year-on-year, net sales margin of 15.80%, year-on-year +5.73pct, net profit margin of non-attributable parent of 14.1%, +6.82pct year-on-year. The company's sales, management, R&D and financial expense ratios in 2022 were 1.49%, 5.88%, 4.81% and -2.04%, respectively, +0.14pct, -1.62pct, -0.94pct, -4.73pct year-on-year, and the expense ratio for the period was 10.15%, -7.15pct year-on-year. The improvement of overall profitability in 2022 is due to the decline in raw material prices (the average price of aluminum AOO in the Yangtze River nonferrous metal market fell by 7% in 2022), the improvement of management efficiency, and the scale effect brought by the company's product volume.
The company's pricing method is cost-plus method, and direct materials account for a high proportion of costs (direct materials accounted for 48% in 2022), so the fluctuation of raw material prices has a greater impact on the company's gross margin, as of the end of May 2023, Shanghai Yangtze River non-ferrous metal spot aluminum prices decreased by 2% compared with the beginning of the year, down 20% from the 2022 high, raw material prices have eased to help the company's gross margin increase.
In 2022, overseas sales accounted for 59%, and current customers are mainly international Tier1. The company's business covers the automotive industry cluster areas in Asia, America and Europe, accounting for 59% of overseas sales revenue in 2022, and its main customers are large global multinational auto parts suppliers, including Valeo, Bosch, Magna, Continental, thyssenkrupp, Knorr-Bremse, Hanon, Nexteer, etc. With the increase in sales revenue, mainly from domestic new energy vehicle OEMs, the proportion of the company's top five customers has declined, falling to 39% in 2022 (45% in 2021).
Continue to promote the globalization strategy and increase business expansion in North America. The company has been laying out globalization strategy for many years, registered a subsidiary in Mexico in 2014, and set up a North American production base and warehousing center; In 2020, the company set up a project R&D and sales center in Germany; In June 2022, a Southeast Asia production base was set up in Malaysia, and it is planned to invest 126 million yuan to build a procurement and production base for basic raw materials for aluminum alloy die castings, and plan supporting die casting and processing workshops, which is expected to be completed in the first half of 2024. At the same time, in April 2023, it issued a fixed increase plan, and plans to invest 1.233 billion yuan in the construction of a production base for structural parts and parts of the three electric systems in Mexico.
Flat management, digital factory, high self-control rate production, lean manufacturing casts core competitiveness
The company's products have the characteristics of multi-category, non-standardized, multi-batch, etc., and production capacity is one of the core competitiveness. The company has systematic management capabilities, adopts a flat organizational structure, and promotes lean management; Promote the construction of digital factories to ensure product quality and rapid response; Improve the self-made rate and ensure the yield of the whole life cycle.
1. Flat organizational structure, separate production, improve systematic management capabilities
The company adopts a flat organizational structure and has established a comprehensive management system covering technology research and development, product development, procurement, manufacturing, sales, warehousing, logistics, personnel and finance.
In terms of business units, the company is divided into five major business departments and four major project management departments, adopting a separate production mode, procurement, smelting, warehousing and shipping using a centralized mode, and different product series are divided by factory units in production to ensure the proficiency and mastery of the entire production process of each factory, and continuously promote the upgrading of lean management.
2. Increase investment in R&D, invest in the construction of digital factories, and improve production efficiency
The company will include enterprise innovation R&D capacity building in the long-term strategic development plan, and the company's R&D expense rate in 2022 will be 4.8%, which is at the highest level of similar companies, and the number of R&D personnel has increased year by year, with a total of 685 people by the end of 2022, accounting for 10% of the total number of the company. R&D investment is mainly used in new technologies, new processes, process improvement, material applications, etc., while promoting the layout of advanced intelligent equipment and automated production lines to increase the per capita output value.
Since 2016, the company has launched the digital factory strategy, integrating the information management system into all aspects of operation and management. The company's MES system has established the company's quality management big data, integrating order management, shipment plan management, production plan management, production process management, quality management, equipment monitoring, process monitoring, employee management, molds, fixtures, tools and other tooling monitoring and exception management, product traceability management and other functional modules, the system real-time records the quality control node data in the whole process from the main raw materials storage, production links, and final to finished products warehousing and warehousing, and is connected to the company's ERP system. Generate management reports in real time to achieve traceability and management of product quality.
At the same time, the company actively promoted the construction of pilot 5G+ smart factories, and in early 2019, it cooperated with China Mobile to build the country's first 5G fully connected smart factory with factory No. 6, realizing the full connection of data of core equipment and cloud factory reengineering. According to the information disclosed by Ningbo Economic and Information Bureau, through the layout of the smart factory, the project has achieved a 50% increase in per capita output value, a 42% increase in equipment OEE, an average die casting production qualification rate of more than 84%, and a 70% reduction in network deployment and operation and maintenance costs, effectively improving production efficiency. In January 2021, the company was awarded the "5G + Industrial Internet" pilot demonstration project of the Ministry of Industry and Information Technology; In June 2021, it was selected into the list of pilot enterprises of "Future Factory" in Zhejiang Province in 2021 by the Department of Economy and Information Technology of Zhejiang Province.
3. Increase the self-made rate and ensure the yield rate of the whole life cycle
The company's main production processes cover the entire link of mold development, product die-casting, trimming processing, heat treatment, precision machining, surface treatment, and assembly into parts manufacturing, ensuring the yield rate of the whole life cycle, and promoting synergy with customers, so as to achieve the purpose of optimizing design, reducing costs and increasing efficiency.
Mold, processing fixture is to determine the shape, precision, product quality, internal organization of die-casting products key process equipment, the company has independent research and development, design, production of mold and processing fixture capabilities, the earliest in 2004 established Unite Mould Company, in 2017, 2019 subsidiary Unite Mould was selected by the China Foundry Association as "China's Top 20 Die-casting Mold Manufacturers Comprehensive Strength", to ensure the company's mold self-sufficiency, the core mold self-control ability is product quality, An important guarantee for rapid response.
In terms of raw materials, the company established an overseas wholly-owned subsidiary IKD (MALAYSIA) SDN. BHD, purchased 60 acres of industrial land, plans to build the procurement and production of basic raw materials required for aluminum alloy, the project is scheduled to start in April 2023 and be completed in the first half of 2024, which is expected to effectively alleviate the impact of external raw material prices.
In terms of process, the company has a number of core production processes and technologies, including energy-saving and environmental protection melting and insulation technology, multi-stage injection real-time feedback control technology, high vacuum die casting technology, local extrusion die casting technology, mold temperature control, aerosol spraying technology, thin-wall processing, automatic integration, online detection, etc.
Benefiting from the trend of lightweighting, the product extends to medium and large pieces
The general trend of lightweight is the domestic market size of hundreds of billions
Automobile lightweight is to reduce the curb weight while ensuring the strength, safety, and cost of the car unchanged or better. Lightweight helps fuel vehicles save energy and reduce emissions, reducing vehicle quality by 10%, reducing fuel consumption by about 6%-8% and exhaust emissions by 4%-10%. In terms of new energy vehicles, due to the addition of the three-electric system, the weight of traditional vehicles is increased by 5%-25%, and weight reduction can effectively increase the cruising range and have a stronger demand for lightweight. At the same time, the lightweight is more stable in operation, can shorten the braking distance, and is more safe.
In terms of industrial policy, the "Industrial Structure Adjustment Catalogue" issued by the National Development and Reform Commission lists the application of lightweight materials as one of the seven catalogs of automobiles, and the "14th Five-Year Plan for the Development Plan of the Foundry Industry" issued by the Foundry Industry Association puts forward the requirements for automobile structural parts, various types of automotive light alloy structural castings formed by high-pressure/low-pressure/semi-solid/extrusion processes, and the integrated casting of multiple parts of the body.
Compared with other materials, aluminum has more good characteristics and is a good lightweight material for automobiles.
1. The density of aluminum is low, the density of pure aluminum is about 2.7g/cm3, about 1/3 of steel, that is, it can reduce weight by 30%-40%, high specific strength and high specific stiffness; 2. Good ductility, easy forming processing, aluminum can be processed by a variety of casting methods, with good plasticity; 3. Strong shock absorption ability; 4. Good heat dissipation; 5. Corrosion resistance. However, because the material cost and connection cost of aluminum alloy are higher than that of high-strength steel, the penetration rate on the body is not high at present.
1. Application of aluminum alloy parts (dosage, penetration rate)
In the field of new energy vehicles, the current penetration rate of aluminum alloys for three electric systems, heat exchange systems and wheels is high, while the penetration rate of chassis systems, body structural parts, and body covering parts is still low, which is the blue ocean market for aluminum alloy applications.
Referring to the "Evaluation Report on Aluminum Use in China's Automotive Industry (2016-2030)" released by the International Aluminum Association, in the weight distribution of automotive aluminum alloys, engines (accounting for 25%), transmission systems (accounting for 19%), wheels and braking systems (accounting for 27%) are the main application fields of aluminum alloys. In terms of new energy vehicles, battery systems (accounting for 33%) and wheels (accounting for 19%) are the main application fields of aluminum alloys, while aluminum alloys for body structural parts, body covering parts, and chassis are still less used.
Bicycle aluminum penetration angle (bicycle aluminum alloy amount / maximum available aluminum amount). It is estimated that the average maximum available aluminum amount of passenger cars accounts for about 30% of the whole vehicle, of which the battery system, engine, transmission system, heat exchange system, and wheel penetration rate is high.
Body structural parts, body covering parts, chassis aluminum alloy penetration rate is low. The penetration rate of aluminum alloy body structural parts in traditional fuel vehicles is 4%, and the penetration rate in new energy vehicles is 8%, there is still a lot of space, in summary, in new energy passenger vehicles, the value of aluminum used for bicycles can reach 20,000 yuan.
2. Application category of automotive aluminum alloy parts
1) Aluminum for batteries
The traditional battery pack design link is cell-module-battery pack, and aluminum alloy has been applied in the three major links. The aluminum processing technology mainly used in battery aluminum shell and module structural parts is extrusion, pulling, bending, etc., and the application of die-casting enterprises focuses on battery pack covers, trays and other components.
The battery pack structure shows a trend of integration: the design changes of the battery pack have developed from the initial cell-module-battery pack structure to include large module technology (Model3 has been reduced from 16 battery modules to 4 compared to ModelS), battery moduleless technology (CTP), battery chassis integration technology (CTC), battery body integration technology (CTB), etc. CTP technology directly integrates the battery cell into the battery pack, the essence of which is to make full use of the battery pack space through the design of the battery structure, improve the overall mass energy density, and reduce the battery cost. The volume utilization rate of the CTP3.0 battery pack released by CATL has been increased to 72%, and the energy density can reach 255wh/kg.
The upper cover of the battery pack has a relatively single function, and the tray not only has the role of bearing and protecting, but also generally integrates components such as water-cooled plates, which has a higher value. Based on the change of battery pack technology, the battery pack tray can also be roughly divided into steel and aluminum structure, aluminum profile tailor welding (aluminum alloy frame + aluminum plate structure), integrated die-casting aluminum three process categories, because the integrated die-casting process has not yet reached the mass production standard, the current extruded aluminum alloy tray + profile tailor welding as the main processing technology. The value of the die-cast battery pack is about 400-500 yuan, the value of the extruded battery tray is expected to be 1000-2000 yuan, the integrated die-casting battery tray has higher requirements for the tonnage of the die-casting machine and the difficulty of the process (or 12,000 tons of die-casting machine), the added value is expected to be higher, and the integrated water cooling plate and other parts, the volume and weight are larger, and the value of the bicycle is expected to be more than 2500 yuan.
2) Aluminum for body structural parts
The main reason for the low penetration rate of aluminum for body structure parts is that the process difficulty of large-scale thin-walled products is high, and the production efficiency of a large number of solder joints is low, and the production cost is high. Body structural parts are the body frame, play the role of support and impact resistance, parts are generally larger in size, and complex structure, general mechanical property requirements are: tensile strength greater than 240MPa, yield strength greater than 180MPa, elongation greater than or equal to 10%, ordinary die casting performance is difficult to achieve.
Compared with high-pressure die-casting, high-vacuum die-casting technology can reduce the coil gas, complete filling to improve strength and elongation, and the application products have expanded from high-pressure casting shock absorbing towers, wheel covers and other body structural parts to other medium and large body structural parts. At the same time, the integrated die-casting process can effectively reduce the number of welding joints and reduce the cost of aluminum alloy body structural parts. With the development of large-tonnage die-casting machines and high-vacuum molds, as well as the improvement of the yield of integrated die-casting process and the development of extrusion technology, die-casting aluminum alloys and extruded aluminum alloys have the potential to gradually replace steel stamping and welding body parts.
3) Aluminum for chassis parts
A vehicle chassis system module includes one set of lightweight subframe, one set of lightweight suspension system (control arm), one set of steering knuckles, etc.
Because the chassis parts are safety parts, aluminum forging control arm, aluminum forging steering knuckle is the process that can best meet its mechanical property requirements, the subframe structure is relatively complex, and a single process is often difficult to meet the requirements, and currently requires multi-process preparation, including casting molding + extrusion, stamping + extrusion, stamping + casting. Compared with the traditional casting and stamping process, the structure of high-quality castings such as forging, extrusion molding and low-pressure die-casting is fine and uniform, and the yield strength, tensile strength and elongation are improved.
4) Intelligent driving applications
In the direction of intelligence, aluminum alloys also have a high application range. Including automotive vision systems (imaging systems, lidar, etc.), central control display systems, electric power steering systems, electronic control units, etc. can be used in aluminum alloy housing.
3. Differences in process categories of automotive aluminum alloy parts
According to the difference in the forming process of aluminum alloy parts, it can be divided into cast aluminum alloy and deformed aluminum alloy, and deformed aluminum alloy is divided into extrusion (profiles, pipes, bars), forging, stamping, rolling (aluminum plate, strip, foil) and other categories.
1) Die casting
The die casting process is efficient, one-time molding, suitable for mass production. Die casting is the process of filling the mold cavity with molten liquid metal at high speed and high pressure, dissipating heat in the mold cavity, and solidifying it under high pressure into complex thin-walled products. The main difference between die casting and other casting processes is high-speed and high-pressure molding, and the melt can quickly fill the cavity, so as to accurately replicate its size and surface characteristics, and obtain thin-walled, complex-shaped castings with a high degree of molding at one time.
The main defect of die-casting is the problem of porosity in the die-casting aluminum alloy. Porosity is caused by the turbulent state of liquid metal during the high-speed punching process, and the porosity problem not only reduces the mechanical properties (mainly elongation) and airtightness of the die casting, but also leads to the inability to heat treatment (stomatal expansion) for reasons including:
1. Improper setting of die-casting process parameters leads to defects such as porosity and shrinkage of the coil gas, including the control of injection speed and specific pressure of injection. The injection speed is directly related to the filling state and filling capacity of the alloy liquid, due to the extremely fast filling speed, the gas in the cavity is difficult to completely discharge, affecting the degree of thin-walledness, as well as different tensile strength and elongation. The injection specific pressure also has a great influence on the microstructure properties of aluminum alloy, and the appropriate injection ratio corresponds to the density of the structure, the degree of grain refinement, tensile strength and hardness.
2. The wall thickness of the product itself is uneven, and the difference is too large, which is easy to produce pores.
3. In terms of mold, the pouring system determines the filling condition of molten metal, and the heat balance process of the mold is the core process in the control of yield control and stable control of process of die castings.
In view of the porosity and shrinkage defects caused by die casting, the existing research has developed die-casting processes such as vacuum die-casting and semi-solid die-casting, as well as technologies such as local extrusion and local temperature adjustment of molds.
Vacuum die casting in the metal liquid filling before the cavity gas extraction, and then in the state of reduced pressure injection, can effectively solve the problem of pores in the die casting process, obtain more dense, smaller internal pores and more dispersed die castings, improve the elongation, conventional die-casting aluminum alloy elongation is generally about 4%, and vacuum die-casting can be increased to 8%.
2) Forging
Forging is through the forging machinery to apply pressure to the metal blank, and to shape the process, forging aluminum alloy parts have high strength, forging can eliminate the metal in the smelting process of casting loose and other defects, optimize the microstructure structure, can be used in the automobile in the high-strength structural parts, including crankshafts, connecting rods, hubs and other parts.
Compared with the die-casting process, forging mechanical performance is high, but the process cost is higher, the equipment cost is high, and the mold life is short, resulting in higher production cost cost, and forging does not have the ability of mass production, the current aircraft and other applications forging process more, automotive applications less, a small number of applications such as chassis safety parts and other products.
3) Extrusion
Extrusion is to apply pressure to the metal blanks placed in the mold cavity to make directional plasticity, so as to obtain profiles of equal cross-section, extrusion material performance consistency is high, extrusion can obtain more uniform three-way compression stress state than ordinary casting and rolling, product strength is higher, stability is better.
The extrusion process has a high degree of one-time molding and has a wide application potential on the car body. Compared with die-casting, extrusion is more suitable for body stringers, beams, sill beams, bumpers, luggage racks, anti-collision beams, battery pack tray profiles and other regular-shaped parts, which can form a good supplement.
4) Stamping
Aluminum alloy stamping is mainly used for body covering, also known as aluminum alloy body panel, like steel stamping, is to use the rolling process to obtain the body cover sheet, and then through stamping to obtain the corresponding parts. However, the mechanical properties of parts in the stamping process are not as good as those of other casting methods, and we believe that with the advancement of die casting and extrusion processes, there is a trend towards replacing stamping processes.
4. The domestic passenger car aluminum die-casting industry has a market size of 100 billion yuan
According to the "Energy-saving and New Energy Vehicle Technology Roadmap" issued by the Society of Automotive Engineers of China, it is proposed to promote the application of aluminum alloy in automobiles, and the aluminum consumption target for bicycles is 250kg in 2025 and 350kg in 2030. In 2035, the weight reduction coefficient of fuel passenger vehicles (the ratio of body-in-white mass to torsional rigidity of the body and wheelbase to wheel base product) will be reduced by 10%, 18% and 25%, respectively, and the weight reduction coefficient of pure electric passenger cars will be reduced by 15%, 25% and 35%.
Based on the data of the Society of Automotive Engineers and the international aluminum industry, the amount of aluminum used in passenger cars in China in 2018 is about 120kg, of which 119kg for fuel vehicles and about 141kg for new energy vehicles, which is quite different from the above lightweight phased goals, and the amount of aluminum alloy used in bicycles has high room for improvement.
In terms of parts space, the market space of the automotive aluminum die-casting industry is estimated through the following assumptions:
Hypothesis 1: From the perspective of manufacturing process, according to the data of the international aluminum industry, aluminum die-casting accounted for about 60% in 2018, combined with the previous analysis, the battery pack box, body structure parts, body cover parts can be extruded, integrated die-casting molding, it is expected that the proportion of the corresponding process will increase, and the overall proportion of die casting (including integrated die-casting) will decrease slightly.
Hypothesis 2: The pricing method of aluminum alloy casting is generally based on the weight of the product, the difficulty factor of the process, the difference in production line, the yield rate, etc. to obtain an average cost, and then assign the processing rate, so the actual price per ton of different products is different, and we expect the average selling price to be 45 yuan / kg.
Based on the above two assumptions, it is expected that:
In terms of the amount of aluminum used in bicycles, it is estimated that the amount of aluminum used in domestic passenger cars in 2021 will be 146kg, of which 180kg will be used for new energy vehicles, and it is expected to increase to 213kg for passenger cars in 2025, of which 250kg for new energy vehicles. Specifically, the amount of aluminum used in battery systems, body parts and chassis systems in 2021 will be 43kg, 25kg, and 18kg, respectively, and is expected to increase to 50kg, 40kg, and 30kg by 2025, and the corresponding penetration rate will increase to 100%, 15%, and 55%, respectively.
In terms of total aluminum consumption, the total aluminum consumption of passenger cars in 2021 will be about 3.13 million tons, which is expected to increase to 5.27 million tons by 2025, CAGR=14% from 2021 to 2025, and the total aluminum consumption of new energy vehicles in 2021 will be about 600,000 tons, and the total aluminum consumption of automobiles is expected to increase to 3.25 million tons by 2025, with a CAGR of 2021-2025 = 52%.
In terms of passenger car parts market space, the market space of aluminum alloy parts (including all processes) is expected to increase from 112.7 billion yuan in 2021 to 189.8 billion yuan in 2025, with a CAGR=14% from 2021 to 2025. Among them, it is estimated that the market space of the aluminum die casting industry will be 80.3 billion yuan in 2021 and increase to 125.3 billion yuan in 2025.
From small and medium-sized parts to three-electric systems, body structure parts, intelligent aluminum alloy die-casting parts expanded
Since 2018, the company has accelerated its layout in the field of new energy vehicles and automotive intelligence, established a new energy vehicle parts division, and realized the coverage of aluminum alloy precision die-casting products such as new energy vehicle three electric systems, thermal management systems, intelligent driving systems (image systems, radar systems, domain control systems, central control display systems, HUD systems), steer-by-wire/brake-by-wire systems, and body structural parts. In 2022, the company's aluminum alloy die-casting plate is expected to account for about 70% of the new energy vehicle project life cycle new sales revenue; Among them, the new energy three electric systems accounted for about 40%, the intelligent driving system projects accounted for about 12%, the thermal management system projects accounted for about 10%, and the new energy body structural parts accounted for about 5%.
China has increased the construction of production bases in Liuzhou, Ningbo and Anhui.
The company's Liuzhou production base was officially completed and put into operation in the second quarter of 2022, the plant is planned to be used to build automotive lightweight aluminum alloy precision die-casting parts, the project is expected to achieve an annual production capacity of 30 million automotive lightweight aluminum alloy precision die-casting parts, including: steering system 13 million pieces, transmission system 6 million pieces, braking system 6 million pieces, three electric system 5 million pieces, etc.
In October 2022, the company completed the issuance of 1.57 billion yuan of convertible bonds to build the Ikedi Intelligent Manufacturing Industrial Park project, which was completed and delivered in November 2022, according to the EIA report, the products cover 3 million new energy vehicle battery system units, 2.5 million motor housings, 1.5 million electronic control and other shells, and 100,000 body parts (rear floor, etc.). The company will introduce medium and large die-casting units ranging from 800 tons to 8,400 tons at home and abroad, and as of the announcement of the annual report, 10 large-tonnage die-casting machines have been in place, and 6,100-ton die-casting machines will enter the market in April 2023.
On February 10, 2022, it signed the "Investment Agreement" with the Administrative Committee of Anhui Hanshan Economic Development Zone on the phased construction of new energy vehicle three-electric system parts and automotive structural parts intelligent manufacturing project. In February 2022 and May 2022, iKedi (Anhui) New Energy and Aikedi (Maanshan) New Energy were established respectively. The first phase of the company's Anhui project of about 270 mu has officially started construction on March 8, 2023, and is scheduled to be completed and delivered in the second half of 2024.
Overseas, it has established a North American production base and storage center in Mexico, a project R&D and sales center in Germany, and a Southeast Asia base in Malaysia.
The company has a long time of production and management experience in Mexico, and started the construction of production bases and storage centers in Mexico in 2014, and the North American base in Mexico has completed the completion and delivery of the main plant, and the project is expected to be put into normal use in the second quarter. At the same time, the construction of the second phase plant in Mexico will be started, focusing on aluminum alloy products for new energy vehicles produced by 3,000 tons to 5,000 tons of die-casting machines.
In April 2023, the company released a plan to issue A-shares to specific objects, with a planned investment of 1.233 billion yuan, and plans to set up a new subsidiary, Ikedi New Energy Technology Co., Ltd., as the implementation body, to invest in a new production base of new energy vehicle structural parts and three electric system parts in Guanajuato, Mexico, and is expected to add 1.75 million pieces of new energy vehicle structural parts per year and 750,000 pieces / year of new energy vehicle three electric system parts production capacity after reaching production, focusing on the new energy vehicle market in North America.
Promote the construction of production bases in Malaysia, improve the supporting industrial chain, and ensure the supply of raw materials. In June 2022, the company established a new wholly-owned overseas subsidiary IKD (MALAYSIA) SDN. BHD, purchased 60 acres of industrial land, plans to build the procurement and production of basic raw materials required for aluminum alloy, in order to ensure the manufacturing cost of raw materials and stable quality of molten aluminum. At the same time, a die-casting workshop and a supporting processing workshop are planned for the production of automotive aluminum alloy parts directly exported to the United States, and the project is scheduled to start in April 2023 and be completed in the first half of 2024.
In 2014, the company launched a plant in Mexico to seize the opportunity of overseas expansion of lightweight parts
The lightweight industry is highly competitive and has a high localization rate, and going overseas is one of the ways for domestic enterprises to expand.
Mexico is a major exporter of automobiles, with 87% of the total production of 3.31 million vehicles in 2022, of which 87% were exported, with an annual export volume of 2.22 million vehicles, making it a major exporter of automobiles in the world, mainly to the United States, and domestic consumption depends on lower-priced imported cars.
Mexico has a good export advantage to the United States, mainly thanks to the North American Free Trade Agreement (NAFTA), which entered into force in 1994, which has a key origin requirement, requiring 62.5% of automotive parts to be produced in the United States, Mexico and Canada to enjoy tariff reductions. Under the USMCA Agreement, which came into effect in July 2020, this provision requires an increase in the rules of origin for automobiles, and the proportion of automotive parts produced in the three countries from 62.5% to 75% in order to enjoy tariff reductions. Therefore, the establishment of a factory in Mexico by a local company is an important way to expand its business in North America.
Mexico's automotive industry cluster is concentrated in the northern region, the northern U.S.-Mexico border region, and the Bajío region in central Mexico, including Coahuila, Monterrey in Nuevo Leon, Mexico City, Guanajuato, Aguascalientes, etc. It mainly covers cars including Tesla, General Motors, BMW, Audi, Volkswagen, Nissan, Stellantis and so on.
Domestic enterprises with Minth Group, iKedi, Sanhua Intelligent Control, and Dymei Co., Ltd. have an earlier layout in Mexico, mainly around Coahuila, Monterrey, Nuevo León, Aguascalientes, Guanajuato, Mexico City and other regions where the main engine plant is located.
As new production capacity needs to be climbed and overseas operations require experience accumulation, the company has a leading overseas layout among similar companies and is expected to seize the opportunity in profitability and market share. In 2014, the company started the construction of production bases and storage centers in Mexico, and the first phase has been completed, and the second phase focuses on aluminum alloy products for new energy vehicles produced by 3000T-5000T die-casting machines. In April 2023, the company issued a fixed increase plan, planning to invest in Mexico with a project investment of 1.233 billion yuan, and is expected to add 1.75 million pieces / year of new energy vehicle structural parts per year and 750,000 pieces / year of new energy vehicle three electric system parts production capacity after reaching production, which will be used to develop the new energy vehicle market in North America.
Lay out new processes and cultivate new growth points
Acquired H.B. Fuller Taicang to expand its zinc alloy business.
In July 2022, the Company acquired 43.75% of the equity of H.B. Fuller Die Casting (Taicang) Co., Ltd. (now renamed "Ikedi Fuller Precision Technology (Taicang) Co., Ltd.") and 23.75% of the equity of Föhl Taicang held by Foehl Asia Pacific Limited for RMB 299 million, for a total of 67.50% of the equity of H.B. Fuller Taicang.
Fuller Taicang is mainly engaged in the research and development, production and sales of zinc alloy precision die-casting parts, in 2021 Fuller Taicang revenue of 320 million yuan, a year-on-year increase of 33%, net profit of 34.22 million yuan, products are used in automobiles, household appliances, communications, consumer electronics and building hardware and other fields, in the past three years automotive business accounted for more than 80%, products are mainly used in automotive safety systems (seat belts, airbags), electronic systems (antennas, ignition switches, remote control keys), motor systems (motor housing), Seat systems (seat rail gearbox parts), steering systems (steering locking mechanisms, steering column sealing covers) and other fields.
Compared with aluminum alloy, zinc alloy has low melting point, good fluidity, easy fusible welding, easy surface treatment, and can form precision die-casting parts with complex shapes, smooth surfaces, thin walls, etc., which can complement the company's current process. Through the acquisition of H.B. Fuller Taicang, the company further expanded its product categories and developed downstream applications, expanding into household appliances, communications, consumer electronics and construction hardware, etc., to enhance the company's overall competitiveness and anti-risk ability.
Acquired Yinbao die casting and extended the technical route.
In 2020, iKedi won 40% of the equity of Shenzhen Yinbaoshan New Die Casting Technology Co., Ltd. through public auction, and signed the "Equity Transfer Agreement" with conditional effect with natural person shareholder Mai Guoming, transferring 11% of the equity held by Yinbao Die Casting, and obtaining a total of 51% of the equity of Yinbao Die Casting.
Semi-solid molding technology can be used to prepare castings with high compactness and high mechanical properties, which is a process that combines low cost and high performance.
Mainly thanks to:
1. Compared with conventional liquid molding, semi-solid slurry already exists in solid phase, which solves the porosity problem of conventional die-casting, and the molding temperature of semi-solid molding metal paste is low, which can improve mold life and reduce die-casting costs.
2. Compared with conventional solid-state molding, semi-solid slurry has better fluidity and is easy to form complex castings at one time.
Yinbao die-casting is mainly engaged in the development of auto parts, rail transit, communications, security, connectors and other die-casting parts, has mastered the semi-solid die-casting mass production technology, the existing semi-solid die-casting machine 12 sets (280T-1600T), the shipment of semi-solid auto parts products exceeds 3 million pieces.
Stable layout integrated die-casting, broad growth space.
Integrated die casting replaces the process of stamping + welding and reduces the cost of body manufacturing. Aluminum alloy in the rolling, casting, forging, extrusion and other processes after forming as parts, body manufacturing is generally through stamping + welding forming, and aluminum alloy itself raw material cost is high, and welding difficulty, is the main reason for restricting large-scale replacement of steel, taking Audi A8 as an example, its body connection method reaches 14 kinds of hot and cold connection technology, including steel structure welding, aluminum structure welding, steel aluminum welding technology, etc. Integrated die casting combines stamping and welding processes, simplifying the manufacturing process of body-in-white.
Taking the integrated die-casting of Tesla Model Y body rear floor as an example, more than 70 parts are reduced to 1-2 large aluminum castings, and welding points are reduced from 700-800 to 50, so that the weight of parts is reduced by 10%-20%, and the cost is reduced by 20%. In terms of production efficiency, the manufacturing time has been shortened from 1-2 hours to 3-5 minutes, which has significantly improved production efficiency. The current production of the Model Y at the Austin plant can reduce the number of front and rear floor parts from 171 to two, and reduce the number of welds by more than 1,600, further improving production efficiency and reducing costs.
At present, the yield rate of integrated die casting is low, which is the main reason restricting the large-scale development of the industry. The preparation of ultra-large, complex integrated thin-walled products has higher process requirements: compared with traditional castings (the tonnage of the die-casting machine can reach 4400T), the tonnage of the integrated die-casting machine requires more than 6000T, which has higher requirements for equipment investment and site (and the original equipment and site cannot meet the requirements).
In terms of materials, alloys need to have good filling ability, because integrated die-casting products are ultra-large thin-walled products, product deformation is easy to cause product deformation through heat treatment, and heat-free treatment materials need to be developed. At the same time, it is necessary to develop ultra-large vacuum molds, and the investment in early research and development is large. At present, only Tesla has large-scale application of integrated die-casting rear flooring in the industry, and the overall penetration rate is low.
There are clear application directions in the industry is the lower body composed of the front floor, rear floor, middle floor/integrated battery tray, etc., with a total bicycle value of about 7000-8000 yuan. In the long term, in addition to the lower body, it is expected that the subframe, doors, rear cover, ABCD column, etc. can be obtained through integrated die-casting, and the corresponding bicycle value is expected to increase to more than 10,000 yuan.
Hypothesis 1: Penetration rate, the integrated die-casting models that have been mass-produced in 2022 include Tesla Model Y and NIO ET5, corresponding to a rear floor penetration rate of 2%, and the companies currently planning to use integrated die-casting include traditional car companies and new forces such as Tesla, Volvo, Volkswagen, Mercedes-Benz, NIO, Xpeng, and Lili, and the penetration rate is expected to increase to 12% by 2025 (corresponding to 3 million vehicles). It is expected that a small number of models will achieve integrated die-casting of the front floor in 2023, and a small number of models will achieve mass production of battery trays in 2024.
Hypothesis 2: In terms of bicycle value, according to the difference in model and the difference in the design of the integrated rear floor, its weight is expected to be between 40-60kg, the value of the rear floor bicycle is expected to be between 1800-2500 yuan, the weight of the front floor is expected to be similar to the rear floor, the integrated battery tray is larger due to the increase in function, the weight is expected to be 60-70kg, and the value of the bicycle is expected to be about 3000 yuan.
Based on the above assumptions, we expect that by 2025, the domestic integrated die-casting parts market space will be 14.1 billion yuan, with broad growth space.
The company's layout in integrated die-casting is relatively stable, and the current layout is mainly in the core die-casting machine and mold link.
In October 2022, the company completed the issuance of convertible bonds of 1.57 billion yuan, and plans to introduce large-scale die-casting units of 800-8400 tons, including 4 sets of 4400T die-casting machines, 2 sets of 6100T die-casting machines, and 2 sets of 8400 die-casting machines.
In terms of molds, give full play to the company's advantages and establish a large-tonnage mold design technical team.
Financial analysis: performance benchmark of aluminum alloy die-casting enterprises
We selected Tuopu Group (lightweight business), Wencan Co., Ltd., Guangdong Hongtu, Xusheng Group, Rongtai Co., Ltd. and CHERVON Automobile, which are also mainly aluminum alloy lightweight and die-casting products, as comparable companies for financial comparison.
The competitive advantages of major listed die-casting enterprises are concentrated in a single field or category, and they have begun to gradually expand their product categories to increase the value of bicycles.
Revenue: accounting for about 5% of the market share of the aluminum die casting industry.
The competitive landscape of the passenger car aluminum die-casting industry is fragmented, and the market share of Aikedi is about 5%. Examining the major listed companies Tuopu Group, Wencan Co., Ltd., Guangdong Hongtu, Xusheng Group, Ikedi, Rongtai Co., Ltd., CHERVON Automobile, etc., their 2022 automotive aluminum alloy/automotive casting related revenue is 4.4 billion yuan, 5 billion yuan, 4.8 billion yuan, 4 billion yuan, 3.9 billion yuan, 1.3 billion yuan, 1.7 billion yuan, totaling about 31% of the market share of the aluminum alloy die-casting industry, and the industry as a whole is currently relatively scattered.
In the current stage of development, mainstream enterprises can only focus on a single process or a single category, and it is difficult to achieve a unified layout across processes. The reason is that aluminum die-casting is an asset-heavy industry, and continuous investment is the main source of power to ensure the production capacity and growth of enterprises, and the equipment, molds, materials, and process know-how required by different processes and product categories are different, and long-term accumulation is required to improve the yield rate. Blindly developing multiple processes can lead to a decrease in yield and a decrease in scale effects.
Capital barriers also constitute a moat for aluminum alloy casting enterprises, and it is difficult for new entrants in the industry to surpass in the short term in capital investment and process accumulation, and strengthen the competitive advantage of the leader.
At present, we have seen that the body structure parts, chassis parts, and three electric shells have been actively out of the leading enterprises, and we expect that with the development of integrated die casting (eliminating the industry's long-tail small and medium-sized parts, concentrated on the leader), and the leading enterprises based on the early advantages to further increase investment and scale accumulation, the competitive advantage of the leader will be more obvious.
Profitability: Profitability is the best in its class.
Compared with similar companies, the company's sales gross profit margin and net sales margin (27.8%, 15.8%) are the highest in similar companies in 2022, because small products have high precision and difficulty, and the proportion of labor and manufacturing expenses in production costs is higher (processing costs), and in the cost-plus pricing model, the unit added value is high, so the gross profit margin is higher, and the company's management ability ensures that the expense ratio during the period is in a lower position among similar companies.
Profit quality: The profit quality is better among similar companies, and the return of funds is fast.
By comparing the net present rate of sales (net operating cash flow/sales revenue), the overall profit quality of iKedi is also the best in its class. This indicator measures the return of funds from the main business in the current period, the overall net present rate of sales of die-casting enterprises is not high, and the return of funds is relatively faster than that of Ikedi.
Solvency capacity: It has been at a similar low level for a long time, due to the improvement of the asset-liability ratio of convertible bonds.
In 2021 and 2022, the industry as a whole has risen, mainly due to the high increase in orders from leading companies, increasing borrowing for capacity investment and construction to improve delivery capacity, the company's solvency is better, the asset-liability ratio has been at a low level of similar companies for a long time, and the current ratio is at a high level of similar companies. The increase in the gearing ratio to 43% in 2022 was mainly due to the increase in bonds payable, and the company issued an additional RMB1.57 billion of convertible bonds on September 23, 2022.
Operating capacity: at the middle level of the industry.
The investment situation of major listed companies since 2020 has been sorted out
Since 2020, major listed companies have increased their production capacity for lightweight auto parts.
Tuopu Group continues to invest in chassis systems, the company's chassis system production capacity will be 4.3 million sets in 2022, and the additional fundraising project in 2020 is expected to form an annual production capacity of 4.8 million sets of lightweight chassis system modules after reaching production in 2025, and the public issuance convertible bond project implemented in 2022 is expected to form an annual production capacity of 4.8 million sets of lightweight chassis system modules after reaching production, and further raise funds through additional issuance in 2022 to invest in the construction of 6.1 million sets of lightweight chassis system production capacity.
Xusheng Group increased its investment in body parts and chassis parts while consolidating the competitiveness of the existing three-electric shell; Wencan and Guangdong Hongtu focus on the layout of super-large integrated structural parts.
In 2018, the company began to accelerate the layout of new energy products, invested in the construction of new energy related production lines, and in 2021, the company obtained new energy vehicle projects, thermal management system projects, intelligent driving vision system projects during the life cycle of the new energy vehicle project, thermal management system project, intelligent driving vision system project is expected to account for about 70%. The company has clarified the product positioning of "new energy vehicles + intelligent driving", and expects that new energy vehicle products will account for more than 30% in 2025 and 70% in 2030, accelerating the layout of electric intelligence.
Capital expenditure: Die-casting companies have entered an upward channel, increasing capital expenditure to seize the market.
We measure capital expenditure by using cash paid for the acquisition of fixed assets, intangible assets, and biological assets in the cash flow statement minus cash received for the disposal of fixed assets, intangible assets, and biological assets.
Die-casting enterprises will enter an upward channel in capital expenditure in 2021 and 2022. Due to the rapid development of the company's business, the company's capital expenditure in 2022 is at a medium-high level in its class.
Earnings forecast
Assume the premise
Hypothesis 1: In terms of revenue, the company's revenue sources are automotive and industrial, combined with the company's production capacity layout and the sales forecast of classified products, we expect the company's revenue to be 55.39/69.43/8.648 billion yuan in 2023-2025, respectively, a year-on-year increase of 29.9%/25.3%/24.5%.
Automobile: New energy products drive the company's product volume and price to rise. Before 2019, the company's products were mainly traditional general components, with small size and low unit price (the unit price of automotive products in 2017 was about 15 yuan). With the mass production of new energy products, the overall unit price of the company's automotive products has continued to increase, and the unit price of the company's automotive products will increase to 17 yuan in 2021. In 2022, the decline in the unit price of the company's automotive products is mainly due to the consolidation of H.B. Fuller Taicang.
It is expected that the company's sales of automotive aluminum alloy parts will increase rapidly with the growth of new energy customers, and the new production capacity will be gradually released, and the unit price is expected to increase with the mass production of medium and large products such as the company's three electric shells, and we expect that the automotive revenue in 2023-2025 will be 51.29/64.87/8.139 billion yuan, a year-on-year increase of 31.3%/26.5%/25.5%.
Industrial and other: Industrial product companies currently have no new capacity expansion, and it is expected that the automotive revenue of industrial products in 2023-2025 will be 3.06/3.52/405 million yuan, a year-on-year increase of 20%/15%/15%, and the revenue of other businesses will remain unchanged.
Hypothesis 2: In terms of gross profit margin, the company's gross profit margin decline in 2021 and 2022 is mainly affected by raw materials, in the case of a decline in raw material prices (the end of March 2023 compared with the end of March 2022 aluminum price decreased by about 18%), the company's gross profit margin will increase, and the overall gross profit margin in 2023Q1 has been repaired to 29.65%, but considering that the gross profit margin of medium and large products is lower than that of small and medium-sized products, it is expected that the company's gross profit margin will rise first and then fall in 2023-2025.
Hypothesis 3: In terms of expense ratio, the company's sales/management/R&D/finance expense ratio in 2023Q1 was 1.37%/5.88%/5.13%/1%, respectively, with a year-on-year change of +0.07/-0.80/-0.05/+0.10pct, a month-on-month change of -0.49/+0.40/+0.11/+3.15pct, and the increase in financial expenses was mainly due to the recognition of convertible bond financial expenses of 14.91 million yuan in 2023Q1. At the same time, exchange rates are also expected to affect finance expenses and increase year-over-year.
We expect that the company's scale effect will be released in 2023, the company's product sales are expected to maintain a high growth, expenses will increase synchronously but the expense ratio will decline, and it is expected that the company's sales/management/R&D/finance expenses in 2023 will be 0.78/3.01/2.77/65 million yuan, respectively, corresponding sales/management/R&D/finance expenses are 1.4%/5.4%/5.0%/1.2%.
Forecast for the next three years
We forecast that the company's net profit attributable to the parent in 2023-2025 will be 8.01/10.07/1.276 billion yuan, a year-on-year increase of 23.5%/25.6%/26.8%, and earnings per share will be 0.91/1.14/1.44 yuan.
Sensitivity analysis of earnings forecasts
Valuation
Considering the characteristics of the company's business, we use two methods: absolute valuation and relative valuation to estimate the company's fair value range.
Absolute valuation: 24-27 yuan
Valuation assumptions for the next 10 years are shown in the table below:
Using the FCFF valuation method, the company value range is 24-27 yuan.
Sensitivity analysis of absolute valuations
This absolute valuation is sensitive to WACC and perpetual growth rates, and the following table shows the sensitivity analysis.
Relative valuation: 23-27 yuan
We select Tuopu Group, Xusheng Group and Guangdong Hongtu as comparable companies, and the average PE value of comparable companies in 2023 is 23X.
The company is deeply engaged in precision aluminum alloy parts, new energy orders continue to increase, performance maintains rapid growth, considering the company's good growth and advantages in similar companies, giving a target valuation of 23-27 yuan in 2023, corresponding to PE of 25-30 times.
Based on the valuation of the above aspects, we believe that the reasonable valuation range of the company's stock is between 23-27 yuan, corresponding to the 2023 price-earnings ratio of 25-30 times, which is a premium of 9%-31% over the company's current stock price.
Risk Warning
Risk of valuation
We have adopted absolute valuation and relative valuation methods, and comprehensively concluded that the reasonable valuation of the company is between 23-27 yuan from multiple angles, but the valuation is based on relevant assumptions, especially the calculation of the company's free cash flow in the next few years, the calculation of the weighted average cost of capital (WACC), the assumption of TV and the selection of valuation parameters of comparable companies, all of which incorporate many personal judgments, resulting in the risk of valuation deviation, specifically:
the risk that valuations may be optimistic due to optimistic estimates of the company's explicit and semi-explicit revenue and profit growth rates, resulting in high free cash flow calculations over the next 10 years;
The weighted average cost of capital (WACC) has a great impact on the absolute valuation of the company, and if we assume a risk-free rate of 2.8% and a risk premium of 6.0% when calculating the WACC, there may still be a risk that the valuation of the company will be overestimated due to the underestimation or value of these parameters, resulting in a low WACC calculation value;
We assume that the company's TV growth rate is 1.5% in the next 10 years, the company's industry may undergo large adverse changes in the next 10 years, and the company's sustained growth is actually very low or negative, resulting in the risk of overvaluation of the company;
Relative valuation: We selected the relative valuation indicators of die-casting enterprise leaders with similar business to the company, and considered the company's growth, and finally gave the company a 23-year PE valuation of 25-30 times on the basis of the average dynamic PE of the industry, which may not fully consider the risk of high valuation of the market and the industry as a whole.
Risk of profit forecasts
Assuming that the company's revenue growth in the next three years is 29.9%/25.3%/24.5%, there may be a risk that the company's product sales and price expectations will be optimistic, and then overestimate the performance in the next three years.
We expect the company's gross profit margin in the next three years to be 29.9%/29.4%/29.3%, respectively, and there may be a risk that the company's cost estimate and gross profit will be overestimated, resulting in the company's profit forecast for the next three years being higher than the actual value.
We expect the company's new production capacity to start gradually in 2023, and the actual revenue will also match the new capacity, if the actual production start is delayed and the production is not as expected, there is a risk that the performance expectation in the next three years will be overestimated.
Operational risk
Customer and category expansion is not as expected: The company has continued to expand new energy products in recent years to new energy vehicle customers, if the sales volume of the company's new energy customers is not as expected or the mass production of the company's new energy products is not as expected, it may lead to a slowdown in the recovery of initial investment, competitors seize the company's market share, and the company's revenue growth slows down.
Risk of declining gross margin: Generally, with the increase in volume, the price of products in the automotive industry will be reduced accordingly, and the company is also facing the risk of declining gross profit margin after expanding from small and medium-sized pieces to medium and large items.
The risk of rising raw material prices: the company's main raw materials are mainly alloy aluminum ingots, raw materials account for 48% of production costs, if the aluminum price rises sharply, and the company's product price is not adjusted in time, it may lead to an increase in the company's costs and affect the gross margin level.
Risk of exchange rate fluctuations: The company's overseas business accounts for a relatively high proportion, accounting for 59% in 2022, and exchange rate fluctuations have a greater impact on the company's export business. If the company cannot take effective measures to avoid the risk of exchange rate fluctuations, it will cause the company to bear a large exchange loss and lead to a decline in the company's performance.
Technical risk: the yield rate of aluminum die-casting industry directly affects the quality of the company's products, and in the future competition to improve R&D technology capabilities, if the company cannot accurately grasp the development trend of industry technology, mistakes occur in the decision-making of technology development direction; or the failure of the R&D project to proceed smoothly, the failure to apply the new technology to product development and upgrading in a timely manner, and the situation where the technology is overtaken or replaced, the company will not be able to continue to maintain the competitiveness of the product, which will have a material adverse effect on the company's operations.
Policy risk
Risk of policy changes in the new energy industry: The company's new energy vehicle industry is affected by national policies to a certain extent, and the company's sales revenue/profit may not be as expected due to policy changes.
The risk of changes in export tax rebate policy: The company's products are mainly used for export, and the export tax rebate policy has a greater impact on the company's operation, and the future due to trade frictions and China's export tax rebate policy may change, resulting in uncertain risks in the company's operation.
Risk of adverse changes in preferential tax policies: The tax preferential policies currently enjoyed by the company are mainly income tax incentives for high-tech enterprises, and if the company cannot be continuously recognized as a high-tech enterprise, or the preferential tax policies of high-tech enterprises undergo major changes, the company's performance will be affected.
Internal control risks
Risk of improper control by the actual controller: Zhang Jiancheng, the actual controller, directly holds 8.28% of the company's equity and indirectly controls 32.51% of the company's equity by controlling iKedi Investment, which has a substantial impact on the company's major business decisions.
If the actual controller takes advantage of its controlling position to exercise control over the company's overall business decisions and investment plans, dividend distribution policies and personnel appointments and dismissals through the exercise of voting rights or other means, it may adversely affect the interests of other shareholders.
——————————————————
The report belongs to the original author and is for learning only! If there is any infringement, please delete it by private message, thank you!
Report from [Foresight Think Tank]