Hongxin Technology is deeply engaged in the field of automotive lightweight, and has landed on the GEM to start a new journey of high-quality development

Source of this article: Times Business School Author: Hua Qiu

Text/Hua Qiu

Recently, with the smooth progress of online and offline subscription, BYD's supplier Zhejiang Hongxin Technology Co., Ltd. (hereinafter referred to as "Hongxin Technology") is about to land on the GEM of the Shenzhen Stock Exchange.

According to the prospectus, Hongxin Technology's main business is the research and development, design, manufacturing and sales of forged aluminum alloy wheels for automobiles, and it is a high-tech enterprise that began to apply forging technology to produce automotive aluminum alloy wheels earlier in China, and successfully broke the monopoly of foreign brands on forged aluminum alloy wheels in the mainland commercial vehicle market.

After more than ten years of development, Hongxin Technology has become a professional manufacturer of forged aluminum alloy wheels for automobiles. At present, Hongxin Technology's products are exported to the United States, Canada, Japan, Australia and other countries and regions, and have maintained long-term and stable cooperative relations with many high-quality customers.

Born in competition, excited in competition. From the initial accumulation of technology brands, to sailing overseas, and then to seeking a new chapter of development with the help of the capital market, what is the meaning behind the product layout of Hongxin Technology?

For investors, from the perspective of the development potential of the global market and the competitive advantage of the integration of research, production and marketing, they may be able to better understand the medium and long-term intrinsic value of Hongxin Technology.

Deeply cultivate the field of automotive lightweight, and compete for the blue ocean market of new energy vehicles

The new energy vehicle market, as an important direction for the transformation and upgrading of the global automobile industry, is gradually becoming a blue ocean for major automobile industry chain enterprises to compete for layout. This market is not only about technological innovation and industrial upgrading, but also about the exploration and practice of sustainable travel in the future.

According to data released by the China Association of Automobile Manufacturers, in 2023, Continental's sales will be 30.094 million units, a year-on-year increase of 12%, of which the sales of new energy vehicles will be 9.495 million units, a year-on-year increase of 37.9%. The China Association of Automobile Manufacturers predicts that in 2024, the sales of new energy vehicles in mainland China will reach 11.5 million units, a year-on-year increase of about 20%.

According to the "Action Plan for Carbon Peaking Before 2030" promulgated by the State Council, the mainland proposes to vigorously promote new energy vehicles, gradually reduce the proportion of traditional fuel vehicles in the production and sales of new cars and car ownership, and by 2030, the proportion of new energy and clean energy powered vehicles will reach about 40%. Adhering to the development of new energy vehicles has become a national strategy of the mainland, and it is also the development trend of the global automobile industry.

Thanks to the reduction of the purchase cost of new energy vehicles, the increase of cruising range, the gradual improvement of supporting charging facilities, and the improvement of vehicle safety performance, the market share of new energy vehicles will continue to expand in the future.

It should be noted that with the increase in consumer demand for energy saving, emission reduction and vehicle performance improvement, the market demand for lightweight vehicles continues to rise. Especially in the field of new energy vehicles, lightweight technology helps to improve battery mileage and vehicle efficiency, so it is highly valued by the market.

Ruijie has insight into the market and grasps the industry opportunities. With the rise of the new energy vehicle industry, the company's products have quickly entered the new energy vehicle market with its strong bearing capacity and lightweight advantages.

In the context of the rapid development of today's automobile industry, Hongxin Technology's product categories have been continuously enriched, and nine series of nearly 10,000 products have been formed, and with its deep technical accumulation and market advantages in the field of forged aluminum alloy wheels, the company has shown great growth potential and bright development prospects.

Compared with the traditional casting process, the forging process has the advantages of energy saving and environmental protection, emission reduction and consumption reduction, light weight, high strength and strong plasticity, which is the main development direction of the aluminum alloy wheel production process in the future. Forged aluminum alloy wheels have excellent "lightweight" performance to ensure the realization of instantaneous acceleration ability and driving safety, which is highly in line with the development trend of new energy vehicles, and its position in the future auto parts market will become increasingly important.

As a high-tech enterprise that began to apply forging technology to produce automotive aluminum alloy wheels earlier in China, Hongxin Technology has successfully broken the monopoly of foreign brands on forged aluminum alloy wheels in the mainland commercial vehicle market, and will be awarded the national specialized and special new "little giant" enterprise by the Ministry of Industry and Information Technology in 2023.

Keep the original intention with ingenuity, and forge firmness with enthusiasm. In terms of core technology, Hongxin Technology has independently developed and mastered a number of advanced core technologies such as surface stress relief technology, mirror polishing technology, thermal spraying energy anti-wear technology, and covering film forming technology.

The charm of the brand is based on the strength of innovation. According to the prospectus, in 2022, Hongxin Technology's new energy vehicle product revenue has reached 97.395 million yuan, a year-on-year increase of 121.07%, and in the first half of 2023, the company's new energy vehicle product revenue will reach 61.2016 million yuan, a year-on-year increase of 25.68%, continuing to maintain a steady growth trend.

It is foreseeable that in the competition of the new energy auto parts market, only enterprises that continue to innovate and actively adapt to market changes can occupy a place in the blue ocean market and emerge in the international market.

Create a second growth curve and strive to enhance the company's long-term value

While transforming to electrification and intelligence, China's auto industry is undergoing another significant evolution stage, that is, the transformation of service. In particular, the demand of automobile consumers for after-sales service is becoming increasingly diversified and personalized, and the demand for high-quality and efficient maintenance services is increasing. This has led to a shift in the automotive maintenance industry to a more high-end service model, such as providing customized maintenance solutions and using high-quality accessories.

According to the statistics of Zhiyan Consulting, in recent years, the scale of China's automotive after-sales maintenance industry has been expanding. Affected by factors such as the continuous growth of domestic car ownership, the increase in the average age of vehicles, the relaxation of after-sales modification policy restrictions, and the increase in the personalized demand of car owners, the scale of China's automotive aftermarket industry has reached 1.47 trillion yuan in 2020, an increase of 0.13 trillion yuan over 2019, a year-on-year increase of 10.00%, and will continue to maintain a rapid growth trend in the future. Benefiting from the continuous growth of the domestic and foreign automotive aftermarket, the wheel aftermarket is expected to enter the fast lane.

Take advantage of the momentum to attack vigorously and lead the general trend of industrial development. With keen insight, Hongxin Technology actively develops the vehicle supporting market on the basis of ensuring the market share of the main products in the automotive aftermarket according to the development characteristics of the automotive aftermarket and the vehicle supporting market, so that the vehicle supporting market has become a new growth point for the company's performance and provides a guarantee for the company's sustainable development.

At present, relying on the advantages accumulated in R&D technology, company brand, product quality, etc., Hongxin Technology's products have been directly matched with domestic vehicle manufacturers or first-class suppliers such as Haomet, Dongfeng Liuzhou, Shaanxi Heavy Duty Truck, BYD, CRRC Times, etc.;

In the automotive aftermarket, Hongxin Technology supplies the after-sales system to OEMs such as Daimler through WheelPros, and cooperates with WheelPros (USA), AmericanWheels (USA), FleetPride (USA), Loves (USA), Forgiato (USA), Jost, Kaltire (Canada), S.M.Heights (South Korea), Weds (Japan) and other brands maintain continuous good business cooperation.

Open up a "new track" and advance into a "new blue ocean". Through years of brand reputation building, Hongxin Technology has accumulated a large number of long-term cooperative customers, established a good brand image, laid a good foundation for consolidating market share and opening up new markets, and product shipments rank in the forefront of the industry, with obvious competitive advantages.

From the perspective of performance, in 2023, Hongxin Technology's operating income has jumped from 617 million yuan in 2020 to 965 million yuan, only one step away from the 1 billion yuan mark, and the net profit attributable to the parent company has increased from 52.12 million yuan in 2020 to 74.51 million yuan, showing high growth.

Hongxin Technology said that in the next 3-5 years, the company will closely follow the development trend of the new energy vehicle industry, vigorously promote the application of forged aluminum alloy wheels, and strive to achieve breakthroughs in business performance, scientific and technological innovation, customer service, market expansion, etc., and strive to build the company into the world's largest supplier of forged aluminum alloy wheels in the passenger car market and the main supplier in the commercial vehicle market, and strive to become a world-class professional manufacturer of forged aluminum alloy wheels for automobiles.

Standing at a new starting point, Hongxin Technology is full of ambition

Equipment manufacturing is the important weapon of the country, and the core technology is the "trump card" that supports enterprises to take the lead in peer competition and "win" the market.

After more than ten years of development, Hongxin Technology has mastered many core technologies such as mold design, high-speed precision machining and surface stress relief technology in automotive forged aluminum alloy wheels, and has strong technical advantages in production technology and product lightweight.

Adhering to long-termism, Hongxin Technology has always maintained a prudent and stable business strategy, deeply cultivated its main business, continued to improve profitability on the basis of ensuring financial security, further thickened the moat with high-quality products and services, integrated innovative thinking and technology empowerment, shaped a multi-dimensional core competitiveness, and became a benchmark for a steady cycle of growth.

Nowadays, the development of China's new energy vehicle industry is in full swing, and the acceleration of intelligent networking has continuously enhanced the global competitiveness of China's new energy vehicle industry, which has become a representative of new quality productivity. In the face of the new trend of industry development, Hongxin Technology is taking the initiative to adapt to the new normal, accelerate the pace of intelligent transformation and upgrading, and start the "new quality" development journey.

As a practitioner of new quality productivity, Hongxin Technology has established a robot loading and unloading and logistics automation system in forging, rotating, hot production lines and machining production lines through the application of visual recognition system, MES system and other technologies, and built an intelligent operation system with MES system collection, product traceability control and automated production line drive as the core, gradually realizing the "machine substitution" operation, greatly improving production efficiency, and realizing the traceability control of the whole process of products, and further improving the stability and consistency of product quality.

In terms of passenger car aluminum wheel machining technology, at present, the processing of forged passenger wheels in the industry is carried out step by step according to the process of circulation and production, and Hongxin Technology is based on the characteristics and production process of forged wheel products to connect each production process through automated tracks and robots, and uses the robot integrated system to complete the product refeeding, transportation, detection and identification, etc., which realizes the fully automated processing and production of forged passenger wheel products, effectively reduces labor costs, improves the consistency of products, and reaches the domestic leading level.

In this IPO, Hongxin Technology plans to use the raised funds to build an "annual output of 1 million pieces of high-end forged automotive aluminum alloy wheel intelligent manufacturing factory and R&D center upgrade project" to expand the existing production capacity, enhance the precision and automation and intelligent level of machinery and equipment, production lines, and transform and upgrade existing products and technologies.

It is understood that the fund-raising project plans to introduce a variety of automation equipment such as large-tonnage forging presses, spinning robots, automated production lines, machining centers, automatic coating lines, etc., and is equipped with an intelligent factory management system to comprehensively improve the whole process management level of procurement, production and sales, enhance product quality and production efficiency, further reduce production and management costs, and improve the operating efficiency of enterprises.

At present, Hongxin Technology is striving to accelerate scientific and technological innovation, to endogenous power to answer, to accelerate independent development, to market breakthrough to answer, to accelerate the overseas layout, to the new growth pole to answer, in order to tell the "Hongxin story", and constantly enhance the "Hongxin" brand forged aluminum alloy wheel market influence.

Hongxin Technology also said that the company will be guided by corporate culture and vision, supported by product quality and service, guided by national development strategy, customer needs and values, driven by technology research and development and product innovation, to consolidate the company's dominant position in the field of automotive forged aluminum alloy wheels, and make greater contributions to promoting the high-quality development of the continental automotive forged aluminum alloy wheel industry and serving the global high-quality "green transportation".

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