High-quality tracks are the key to sustainable growth!
Warren Buffett famously said, "Life is like a snowball, the most important thing is to find a very wet snow and a long slope." ”
The long-slope and thick snow track, the most typical is the liquor and medical beauty direction of the consumer industry, which can get out of high-growth and high-profit high-quality companies such as Kweichow Moutai and Aimeike. In other tracks, such as Proya, Dongpeng Beverage, Bull Group and other companies, the overall performance is also good.
Since the beginning of the year, the focus of the market has been on technology stocks. After all, science and technology are the primary productive forces, and only when science and technology progress can we drive the total value of social production and make the whole cake bigger.
Therefore, in the future, the long-slope and thick snow track will mostly appear in the field of science and technology.
For example, low-altitude economy, artificial intelligence, new energy vehicles, and innovative drug research and development are all high-quality tracks worthy of long-term attention, and they are also the core direction of new quality productivity.
For example, double-ring transmission, which not only has the two golden tracks of new energy vehicles + robots, but also is the absolute leader in the subdivided field, with strong growth.
From 2019 to 2023, the revenue of Shuanghuan Transmission will increase from 3.236 billion to 8.076 billion, and the net profit will increase from 78 million to 816 million, an increase of more than ten times. It is mostly driven by the gear business, and the robot reducer business has not yet been fully expanded.
The company's quarterly report forecast shows that the net profit is up to 230 million, an increase of 34.44% year-on-year, and the performance is expected to be good.
The main business of Shuanghuan Transmission is high-end precision gears, which has achieved comprehensive coverage from electric drive gears for new energy vehicles to automatic transmission gears for commercial vehicles.
Passenger car gears are the largest source of revenue, accounting for 52.30% of revenue, and reducer business is the second growth pole, accounting for nearly 7% of revenue.
There are two types of auto parts companies: one is those that continue to deepen the industry to build a solid moat, such as Fuyao Glass, and the other is those that continue to expand their business lines and establish their own advantages through platform supply, such as Tuopu Group.
Double-ring transmission is in between, not only in the gear products excellence, reducer business is also very smooth.
Gear business: new energy vehicle gears, with a market share of 50%, ranking first in China
The volume of passenger car gears, especially those of new energy vehicles, is one of the important reasons for the company's performance growth. From 2019 to 2023, the revenue of this business increased from 1.164 billion to 4.223 billion.
In 2022, the company shipped 13.484 million gears for new energy vehicles, with a market share of over 50%, ranking first in China. Customers include Volkswagen, General Motors, Ford, BYD, FAW, SAIC and other well-known vehicle companies, as well as ZF, BorgWarner and other world-class auto parts suppliers.
In addition, the company has also built a production capacity of 4 million sets of electric drive reducer gears, and its performance is expected to continue to rise.
Reducer business: strong growth, RV reducer domestic brand market share first
The reducer is an intermediate structure connecting the power end and the execution end, which can reduce the speed and increase the torque, including general, special, and precision reducer, and the precision reducer is divided into harmonic reducer, planetary reducer, RV reducer, which is mostly used in humanoid robots and industrial robots.
Generally speaking, the harmonic reducer is used for the humanoid robot arm, the planetary reducer is used for its legs, and the RV reducer has better bearing capacity and is mostly used in large-load industrial robots.
Due to the complex structure and many parts, the R&D cycle and capital investment of RV reducer are also high, and the localization speed is slightly slower. The company has a variety of high-precision reducer products, which can provide reducer solutions for 3-1000kg load robots.
Because of this, in 2022, Shuanghuan Transmission will rank first among domestic brands of RV reducers with a market share of 15%, far surpassing Zhuhai Pegasus, Zhongda and Qinchuan Machine Tools. From 2018 to 2022, the company's reducer revenue increased from 63 million to 556 million, with a very fast growth rate.
So, what are the highlights of the future of double-ring transmission?
- Profitability continues to strengthen
From 2019 to 2023, the gross profit margin, net profit margin and ROE indicators representing the company's profitability will continue to strengthen. In particular, ROE climbed sharply from 2.33% to 10.66%.
ROE = net profit margin of sales× total asset turnover ratio × equity multiplier, in recent years, the asset-liability ratio of Shuanghuan Transmission has decreased, and the equity multiplier has actually declined, and the significant increase in ROE comes from the increase in net profit margin and the acceleration of inventory turnover.
Net profit margin is affected by two factors, one is gross profit margin and the other is period expense ratio. The increase in net profit margin is even greater, which must be a good job in cost control, and it can be clearly seen that since 2019, the sales expense rate and financial expense rate of Shuanghuan Transmission have shown a downward trend.
- In the gear business, there is still room for growth
First of all, it has the logic of both volume and price. New energy vehicles have higher requirements for the accuracy and noise of gears, and the processing is more difficult. Moreover, the reducer gears in the electric drive system of automobiles are different from the gears in ordinary motors, and the price is higher.
In order to achieve faster delivery, OEMs will outsource electric drive gear products, and there is still room for increase in quantity.
Secondly, from the perspective of market space, the output value of the domestic gear industry from 2016 to 2022 will increase from 220.5 billion yuan to 326.9 billion yuan, with a compound annual growth rate of 6.9%. The market size of the gear industry has maintained a steady growth trend as a whole.
- RV reducer, domestic substitution logic is clear
RV reducers are mostly used in the field of industrial robots, and the global demand for RV reducers for industrial robots will be 1.7 million units in 2022, with a market size of 7.3 billion yuan. At present, the downstream demand for RV reducers is still strong, and the market size is expected to double in 2026.
China's installed capacity of industrial robots exceeds 50% of the global total, making it the largest robot market.
Domestic industrial robots are mostly used in the field of lithium batteries, new energy vehicles, electronic appliances, automobile welding and other fields with high precision requirements, and are still dominated by foreign brands, and there is a lot of domestic substitution space, which is expected to drive the localization rate of RV reducer to increase.
In addition, on March 4, Shuanghuan Transmission announced that its subsidiary, Huandong Technology, will be listed on the Science and Technology Innovation Board of the Shanghai Stock Exchange, which is also what we often call "A split A".
The advantage of splitting and listing is that new companies can obtain higher valuations and smoother financing channels, such as Xiamen Tungsten Industry's split of Xiamen Tungsten New Energy and Hikvision's split of EZVIZ Network, which are typical successful cases.
However, the growth of the business that is generally spun off is relatively high, and the valuation and performance of the parent company may be affected somewhat.
In summary, in the two major tracks of new energy vehicles and robots, the product technology and market share of Shuanghuan Transmission have obvious competitive advantages, and the company's profitability is significantly repaired, and the growth is very strong.
Because of this, a total of 436 institutions will be competing for funds at the end of 2023, compared to 265 in the same period last year.
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Source: Flying Whale Investment Research