The cold precision forming industry has high requirements for the process design, mold design and production equipment of metal plastic forming, and the precision forging companies in Jiangsu, Zhejiang and Shanghai have begun to accumulate capital and technical strength since the 1990s, forming a strong technical strength. At present, several well-known precision forming enterprises in mainland China are mainly concentrated in Jiangsu, Zhejiang and Shanghai, and a small number are distributed in Guangdong, Sichuan, Anhui and other places.
New Coordinate was established in 2002 and listed on the main board of the Shanghai Stock Exchange on February 9, 2017. After years of development, New Coordinate has become a leading enterprise in the field of cold precision forming segmentation in China, and has won the titles of "Invisible Champion" in Zhejiang Province, the first batch of specialized and special new "Little Giants", a single champion demonstration enterprise in the manufacturing industry, and the first (set) product in the manufacturing industry in Zhejiang Province.
In terms of main products, New Coordinate has independent intellectual property rights and can compete with international companies on the same stage. In terms of financial data, New Coordinate has a high gross profit margin, high net profit margin and high ROE that far exceed its peers. However, the company's share price performance has not been satisfactory.
On January 31, the new coordinate announced that the company intends to implement share repurchase with its own funds through centralized bidding transactions, with the repurchase price not exceeding 35 yuan per share, and the number of repurchases is expected to account for 0.53%-1.06% of the company's total share capital.
As of April 30, 2024, the company has repurchased a total of 1,334,260 shares, accounting for 0.9876% of the company's total share capital, with the highest purchase price of 21.00 yuan per share and the lowest price of 17.30 yuan per share, and the total amount paid is 25,988,949.72 yuan (excluding transaction costs).
Hidden champion in the field of precision cold forgings
Metal plastic processing (also known as forging) is classified from the perspective of metallurgical recrystallization, and can be divided into two categories: hot forming and cold forming at room temperature. Among them, cold precision forming is an important method for the manufacture of metal parts, which has been widely used because of the high forming accuracy, comprehensive mechanical properties and material utilization, and some or even completely omitted cutting processing.
The main business of New Coordinate belongs to the cold precision forming section of the metal plastic processing industry, including cold forging, cold stamping, cold rolling, cold drawing, rolling and rolling and other processing technologies. The company's main products include precision cold forgings for valve packs, precision cold forgings for valve transmission packs and other precision cold forgings, which are widely used in the valve mechanism of automobile and motorcycle engines.
In 2023, the new coordinate will achieve operating income of 583 million yuan, a year-on-year increase of 10.72%; The net profit attributable to shareholders of the listed company was 184 million yuan, a year-on-year increase of 18.38%.
From the perspective of revenue structure, precision cold forging products of valve transmission group are the main source of the company's revenue, accounting for 70% of the company's revenue, mainly including hydraulic tappets, roller rocker arms, adjusting screws, etc.; Valve group precision cold forging products mainly include valve lock clamps, valve spring discs, valve top caps, etc., accounting for about 15% of the company's revenue.
According to the statistics of China Forging Association, there are currently more than 460 forging backbone enterprises in the country, more than 40 enterprises producing cold-temperature forgings, and only more than 20 enterprises specializing in cold-temperature forming or cold-temperature forming as the main process.
Due to the wide range of downstream applications of precision cold forging technology, including automobiles, motorcycles, power tools, household appliances, military industry, aerospace, electric power, shipbuilding, metallurgy, petrochemical and other industries, the parts used in the above industries are very different in shape, performance, use, etc., and the degree of customization is high, so the market competition for the same product in the cold forging industry is not fierce, and the competitors are also directly relative to the product.
At present, the main competitors of the new coordinate valve pack precision parts are Jed Auto Parts and Zhejiang Liming. The main competitors of valve transmission precision parts are Eaton, Schaeffler, Fulin Seiko, etc.
In terms of gross profit margin, the gross profit margin of major competitors has remained at about 30% in the past two years, far lower than the company's gross profit margin of 55%. In terms of net profit margin, the net profit margin of competitors remained below 15%, which was significantly lower than the company's net profit margin of more than 30%. In addition, the company's ROE level has also remained at a high level all year round, far exceeding its peers.
Technology creates markets
The high gross profit margin of the new coordinates is mainly due to the company's technology research and development capabilities of the whole industry chain cultivated for many years in the field of intensive cold precision forging.
As a leading enterprise in the field of cold precision forming in China, New Coordinate adheres to the business philosophy of "technology creates market", and has an experienced team of engineers and advanced software and hardware environment.
In terms of testing equipment, the company has introduced a variety of testing equipment, including roughness profiler, full-spectrum direct reading spectrometer, image analysis orthostatic microscope and other testing equipment to ensure the accuracy, authority and reliability of the test results. In addition, the company has the ability to design and develop special and non-standard equipment, and can independently transform key equipment. The company has independently designed and manufactured a pickle-free environmentally friendly phosphating production line, special-shaped wire processing equipment, unique and efficient sectional surface grinding equipment, internal grinding machine and assembly line.
In terms of valve precision parts products, the company has the ability to produce more than 100 kinds of valve lock clamps and 300 kinds of valve spring discs, among which the product structure of valve lock clamps has also been expanded from a single groove type to a multi-groove type with higher precision requirements, and the product design continues to develop in the direction of lightweight.
The company has 103 domestic patents and 12 overseas patents, and is a Zhejiang Provincial Intellectual Property Demonstration Enterprise, Zhejiang Provincial Enterprise Research Institute, Hangzhou Enterprise Technology Center, and Yuhang District Innovation and Development Demonstration Leading Enterprise.
In order to strengthen the control of the processing capacity of upstream raw materials, the new coordinate invested 170 million yuan in December 2017 to set up Huzhou new coordinates, relying on the company's independent research and development of non-pickling environmental protection phosphating process to invest in the construction of the "annual output of 60,000 tons of cold forging wire rod environmental protection refining project".
At present, Huzhou new coordinates have been for many bearing manufacturers such as Renren and Universal to supply bearing steel wire rod in a stable quantity. Customer audits are being conducted in a number of different industries, with gradual trial production and delivery of products. In 2023, Huzhou New Coordinates' third-party operating income increased by 101.29% year-on-year. In addition, Xintong is also actively exploring overseas markets. In 2017 and 2018, the company established two wholly-owned subsidiaries, New Coordinate (Europe) Co., Ltd. and New Coordinate (Mexico) Co., Ltd., respectively. With the construction of factories in Europe and Mexico, the company's overseas business has grown steadily.
In 2023, the company's overseas operating income will be 200 million yuan, a year-on-year increase of 35.5%, accounting for 34.3% of the company's operating income. Corresponding to the company's overseas subsidiaries, the revenue of the new coordinates in Europe was 90 million yuan, a year-on-year increase of 45.2%, and the revenue of the new coordinates in Mexico was 30 million yuan, a year-on-year increase of 93.1%.
Expand the application of precision parts in multiple fields
With the development of the cold forging industry and the improvement of national energy conservation and emission reduction requirements, the application of cold precision forming parts will be more and more extensive, and it is expected to gradually replace the general cutting process in precision parts in the future.
At the same time, the new design structure developed by the cold forging process will also optimize the performance of existing parts and components, especially in the automotive field, and other fields including motorcycles, power tools, aerospace, etc. will also make the cold precision forging products play a broad space.
Relying on precision cold forging technology, New Coordinate continues to expand the application field of cold forming technology. At the raw material level, the company has expanded from the previous steel to aluminum, copper, titanium alloy, etc.
At the component level, in addition to the precision parts of the body stability system and the integrated module products of the automotive carbon dioxide heat pump system and thermal management, the company continues to expand the precision components in the electric drive transmission system, power battery system housing, automotive electronic brake system ball screw precision parts and other new products.
In December 2021, the company used its own funds to jointly invest in the establishment of Hangzhou Shanmu Automotive Thermal Management Technology Co., Ltd. with Xu Na, the actual controller of the company, and four other non-related shareholders, which is mainly engaged in the research and development, manufacturing and sales of automotive carbon dioxide heat pump systems, thermal management integrated modules and related valves. As of January 10, 2024, its subsidiary, Hangzhou Shanmu, has obtained 9 utility models and 2 invention patents.
On October 20, 2023, the company's patent "a ball screw transmission structure applied to parking brake system" was authorized by the State Intellectual Property Office. Judging from the company's patent specification, the company's patent has solved the technical defects of the manufacturing process of the lead screw shaft in the ball screw transmission structure with complex manufacturing process, low production efficiency and high production cost. In the case of reduced costs, ball screws are expected to be more widely used.