Huicheng Vacuum's ROE is higher than the industry average, and the layout of emerging industries such as industrial products expands growth space

"Jin Jiyan" Sen Hai / Author Yang Qichao Shifeng / Editor

With the continuous expansion of the production scale of the global electronic information industry, semiconductor, optical components, photovoltaic industry and other industries, the development of various thin film materials and vacuum coating equipment manufacturing industries has been driven. As one of the main suppliers of vacuum coating equipment in China, Guangdong Huicheng Vacuum Technology Co., Ltd. (hereinafter referred to as "Huicheng Vacuum") can provide customized and professional vacuum coating equipment and process solutions for customers in different industries.

In recent years, the weighted average ROE of Huicheng Vacuum is higher than the industry average, and its profitability is outstanding. With more than ten years of deep cultivation in the field of vacuum coating equipment, Huicheng Vacuum has continuously promoted in-depth cooperation with well-known customers and key customers at home and abroad and accumulated high-quality customer resources by virtue of its excellent design and manufacturing capabilities, perfect after-sales service, optimized application solutions, efficient supply chain system and excellent quality management capabilities. In recent years, Huicheng Vacuum has increased its layout in the field of industrial products (such as new energy, composite current collector, etc.), further broadened the coverage of business areas, and created new performance growth points. On May 24, 2024, Huicheng Vacuum opened the subscription, and the issue price-earnings ratio was significantly lower than the industry average, and the rational pricing highlighted the investment value.

1. The issuance price-earnings ratio is lower than the industry average, the pricing is rational, the ROE is higher than the industry average, and the profitability is outstanding

Vacuum coating is a branch of surface treatment technology, which can make the surface of the material obtain new composite properties and achieve new engineering applications, improve the original performance of the product, improve the product quality, and extend the life of the product. In addition to being used in consumer electronics, integrated circuits, optical and optoelectronic components, vacuum coating equipment can also be used in medical equipment, aerospace, solar energy, plastics, packaging, textiles, machinery, anti-counterfeiting, construction and other fields.

With the continuous expansion of the production scale of the global electronic information industry, semiconductor, optical components, photovoltaic industry and other industries, China has further strengthened its position as an important manufacturing base for the global electronic information, solar cells and modules industries. This trend has directly driven the development of various thin film materials and vacuum coating equipment manufacturing industry, making China a country with rapid growth in the use of vacuum coating technology, and bringing good development opportunities to domestic vacuum coating equipment manufacturers.

At present, after decades of development, the domestic vacuum coating equipment manufacturing industry has formed a complete category, reasonable layout, rich variety, vacuum coating technology level and the basic adaptation of the development of the coating industry, and the trend of import substitution is obvious.

As a professional supplier engaged in the R&D and manufacturing of vacuum coating equipment, Huicheng Vacuum is committed to providing customers with professional and high-performance localized vacuum coating equipment.

On May 24, 2024, Huicheng Vacuum opened the subscription, with an issue price of 12.2 yuan per share, corresponding to a diluted price-earnings ratio of 16.31 times of the net profit attributable to shareholders of the parent company before and after deducting non-profits in 2023, which is lower than the "C35 special equipment manufacturing industry" released by China Securities Index Co., Ltd. on May 21, 2024 (T-3) The average static P/E ratio of 27.32 times in the latest month is also lower than the average static P/E ratio of 29.97 times of the net profit attributable to shareholders of the parent company of listed companies in the same industry in 2023.

Among them, the average price-earnings ratio calculation excludes the negative value of Shenzhen Shenzhen Keda Intelligent Equipment Co., Ltd. (hereinafter referred to as "Shenzhen Keda") of -11.81 times and the extreme value of Shenzhen Yitian Automation Equipment Co., Ltd. (hereinafter referred to as "Yitian Shares") of 233.46 times.

Looking at its performance, from 2021 to 2023, Huicheng Vacuum will achieve operating income of 534 million yuan, 571 million yuan, and 522 million yuan respectively, and net profit attributable to the parent company of 71 million yuan, 71 million yuan, and 81 million yuan.

From January to March 2024, Huicheng Vacuum will achieve operating income of 71.7039 million yuan, a year-on-year increase of 1.22%; The net profit attributable to the parent company was 10.1191 million yuan, a year-on-year increase of 55.15% (financial data from January to March 2024, unaudited after review by Rongcheng accountants, the same below).

It is worth noting that in recent years, the weighted average return on equity of Huicheng Vacuum is higher than the average level of comparable companies in the same industry, and its profitability is outstanding.

According to the data of Oriental Wealth Choice, from 2021 to 2023, the weighted average ROE of Huicheng Vacuum will be 25.31%, 20.96%, and 19.67% respectively.

During the same period, the weighted average ROE of Hymson Laser Technology Group Co., Ltd. (hereinafter referred to as "Hymson"), a comparable company in the same industry of Huicheng Vacuum, was 7.48%, 21.26% and 14.67% respectively; The weighted average ROE of Shenzhen Liande Automation Equipment Co., Ltd. (hereinafter referred to as "Liande Equipment") was 2.00%, 5.25% and 11.20% respectively; The weighted average ROE of Shenzhen Keda was 9.11%, -4.77% and -14.28%, respectively. The weighted average ROE of Yitian shares is 8.80%, 5.24% and 2.47% respectively.

According to the calculation of Jinjiyan, from 2021 to 2023, the average weighted average ROE of the above four comparable companies in the same industry will be 6.85%, 6.75% and 3.52% respectively.

In addition, in recent years, the period expense ratio of Huicheng Vacuum is lower than the industry average, and the internal control ability is outstanding.

From 2021 to 2023, the period expense ratios of Huicheng Vacuum will be 14.04%, 14.19%, and 15.59% respectively. Among them, the sales expense ratio of Huicheng vacuum was 2.84%, 2.88% and 3.58% respectively; The management expense ratios were 5.50%, 6.03% and 5.77% respectively.

During the same period, the average period expense ratios of Hymson, Liande Equipment, Shenzhen Keda and Yitian Shares, comparable companies in the same industry of Huicheng Vacuum, were 25.45%, 28.40% and 31.99% respectively. Among them, the average sales expense ratios of the above four comparable companies in the same industry were 9.21%, 9.35% and 10.16% respectively; The average management expense ratio was 6.17%, 7.01% and 8.46% respectively.

In summary, the issuance price-earnings ratio of Huicheng Vacuum is lower than the industry average, and the pricing is rational. At the same time, the weighted average return on equity of Huicheng Vacuum is higher than the industry average, and the profitability is outstanding.

2. Successfully selected into Apple's supply chain system, and continued to expand the revenue and proportion of non-fruit chain of new customers

Deeply cultivated in the field of vacuum coating equipment for more than ten years, Huicheng Vacuum has been recognized by large well-known enterprises at home and abroad by virtue of its own production capacity, product and service quality, technological innovation, rapid response and other advantages, and its main customers include Apple, Foxconn, BYD, Jabil, Voge Optoelectronics, Rijiu Optoelectronics, Hongwang and other well-known enterprises and scientific research institutes at home and abroad, most of which are well-known production enterprises in the industry.

Among them, the consumer electronics industry is one of the main application fields of Huicheng vacuum products, and Apple Inc., one of the leading enterprises in the global consumer electronics industry, and its industry chain manufacturers are its important customers. Since 2017, Huicheng Vacuum has established a good cooperative relationship with Apple industry chain manufacturers.

From 2021 to 2023, Huicheng Vacuum's revenue from the Apple industry chain covers Apple and the major Apple system PVD coating OEMs Foxconn, Jabil, Mia, etc.

In the market-oriented competition, Huicheng Vacuum can be successfully selected into Apple's supply chain, proving its comprehensive competitiveness and competitive advantage in the consumer electronics industry.

In recent years, Huicheng Vacuum has established a good market image and reputation through in-depth cooperation with Apple, and has a good ability to continue to expand new customers for non-Apple industry chain customers, and has formed a brand effect in the industry through continuous research and development of new vacuum coating equipment and other businesses, and gradually cut into the supplier system of well-known domestic enterprises, providing a strong guarantee for its performance growth.

From 2021 to 2023, the revenue of the non-apple industry chain in Huicheng Vacuum's main business income will be 247 million yuan, 367 million yuan and 400 million yuan respectively, accounting for 46.23%, 64.36% and 76.66% of the main business income respectively.

From 2021 to 2023, Huicheng Vacuum will gradually cut into the supplier system of well-known domestic enterprises in addition to the apple industry chain, with 20 customers with a single annual revenue of more than 10 million yuan (such as Zhejiang Rijiu New Material Technology Co., Ltd., Shenzhen Zhenghe Zhongxin Co., Ltd., Jiangxi Woge Optoelectronics Co., Ltd., etc.), and its products are widely used in consumer electronics, other consumer goods, industrial products, scientific research institutes and other fields.

On the one hand, high-quality customer resources ensure that Huicheng Vacuum is at the forefront of advanced technology and application in the industry, improve its technology research and development level, and on the other hand, continuously promote Huicheng Vacuum to improve its comprehensive capabilities such as precision manufacturing, product delivery, and efficient service, so as to maintain the competitive advantage of the industry.

Compared with the weaknesses of foreign enterprises in terms of insufficient technical exchanges and follow-up services, Huicheng Vacuum gives full play to the advantages of local manufacturers and relies on a mature technical team to provide customers with more comprehensive, timely and personalized technical support and follow-up services, and provide equipment guarantee for the sustainable operation of downstream enterprises. Huicheng Vacuum provides continuous personnel training and communication, and has launched a "7*24-hour customer service" to ensure that technicians can provide maintenance services in a timely manner after receiving customer requests.

In short, Huicheng Vacuum has been successfully selected into Apple's supply chain system by virtue of its many advantages, and has established a good cooperative relationship with Apple industry chain manufacturers. At the same time, Huicheng Vacuum has gradually cut into the supplier system of well-known domestic enterprises, and has a good ability to continue to expand new customers.

Third, the two profit models should be developed in tandem with each other, and the layout of emerging industries will expand the growth space

As a vacuum application solution provider focusing on the R&D, production, sales and technical services of vacuum coating equipment, Huicheng Vacuum's main products are vacuum coating equipment, which cover evaporation coating, magnetron sputtering coating, ion coating and other major vacuum coating technologies and their combined applications.

At the same time, with the gradual expansion of the scale of equipment application, Huicheng Vacuum is based on the existing customer base, excavates customer value, continues to penetrate in the field of consumer electronics, and at the same time designs and manufactures according to customer needs, enriches product lines, and provides accessories and consumables, technical services, etc. Among them, technical services include operation and maintenance revenue, customer equipment upgrades and transformation, and specific customer technology development revenue.

Huicheng vacuum equipment sales and technical services two profit models at the same time, equipment sales to expand the scope of technical services, technical services to promote equipment sales.

In the sales process of vacuum coating equipment, Huicheng Vacuum solves the problem of customer coating process to drive equipment sales, and brings follow-up business opportunities such as accessories, consumables, operation and maintenance and transformation, and also improves customer stickiness and loyalty, which is conducive to establishing long-term and stable cooperative relations with customers; The technical services provided to customers have enhanced the popularity and brand power of Huicheng Vacuum in this specific customer field, and established its industry position.

From 2021 to 2023, Huicheng vacuum technology services and other sales revenue will be 25.4124 million yuan, 54.9409 million yuan and 92.7739 million yuan respectively, accounting for 4.76%, 9.63% and 17.78% of the main business income respectively.

The vacuum coating equipment produced by Huicheng vacuum has a wide range of applications, and has been used in consumer electronics fields such as smart phones, screen displays, optical lenses, other consumer goods fields based on household building materials and daily necessities, industrial products such as aviation, semiconductors, nuclear industry, molds and wear-resistant parts, flexible films, as well as universities, scientific research institutes and other fields.

In recent years, in addition to the continuous deepening of the field of consumer electronics, Huicheng Vacuum has also actively expanded other emerging industries or industries with high economic added value, such as BYD, Magna and other customers in automotive intelligent driving, industrial applications such as aircraft front windshield (Jingjiang Port), lithography mask and other fields, new energy applications such as PVD copper foil composite current collector applications (Hengtong Optoelectronics, Jiayuan Technology), etc., as well as Jihua Laboratory and other scientific research institutes, seeking diversified development of enterprise products.

From 2021 to 2023, the sales revenue of Huicheng vacuum vacuum coating equipment - industrial products will be 12.277 million yuan, 76.0841 million yuan, and 137.9764 million yuan respectively, with an average annual compound growth rate of 235.24%. Among them, the main reason for the increase in revenue of this type of product in 2023 is that Huicheng Vacuum continues to develop new application fields, broaden product markets, cultivate new revenue growth points, actively deploy applications and equipment sales in new energy and other industries, and develop related products and achieve revenue in anode materials, lithium batteries, hydrogen energy and other application fields.

In the future, Huicheng Vacuum will focus on increasing resource investment in the field of new energy, including its PVD copper foil composite current collector application equipment that has been introduced to the market, equipment production and customer development in automotive intelligent driving. The above-mentioned downstream markets have favorable factors such as huge market space, bright development prospects, and national policy encouragement.

Especially in the context of rising copper prices, copper foil composite current collectors, as lithium battery "copper reduction" materials, ushered in a "window period" of development.

Composite current collector generally refers to the composite material formed by composite copper foil (negative electrode) or composite aluminum foil (positive electrode), with polymer material as the intermediate layer base film, and through coating and other processes, a double-layer copper \ aluminum conductive layer is piled up on the upper and lower sides of the base film. Compared with the thickness of the traditional copper foil copper layer of 6 microns, the thickness of the composite current collector copper layer is only 2 microns, and the copper consumption can be reduced by 2/3.

It is estimated that the replacement of copper foil by composite copper foil can save 5% of the comprehensive cost, reduce the weight of the battery by 5%, extend the service life by 5%, and increase the energy density of the power battery by 5%-10%.

In general, Huicheng vacuum equipment sales and technical services two profit models at the same time, covering a wide range of business areas. In recent years, Huicheng Vacuum has increased its layout in the field of industrial products, and the sales revenue of related products has risen rapidly. In particular, the PVD copper foil composite current collector application equipment that has been introduced to the market has broad market prospects.

Fourth, the proportion of R&D investment has increased year by year, and eight core technologies have built the core competitiveness

As a high-tech enterprise, technological innovation is the driving force for the survival and development of Huicheng Vacuum. In recent years, Huicheng Vacuum has continued to invest in R&D to ensure the continuous improvement of its technological innovation capabilities.

From 2021 to 2023, Huicheng Vacuum's R&D investment will be 23.655 million yuan, 31.056 million yuan, and 30.1516 million yuan respectively, accounting for 4.43%, 5.44%, and 5.77% of operating income respectively.

In terms of R&D team building, Huicheng Vacuum actively introduces high-level and compound technical talents, optimizes the talent structure, and gradually forms a technical R&D team with reasonable levels and capable personnel, so as to comprehensively enhance R&D and innovation capabilities.

As of December 31, 2023, Huicheng Vacuum has a total of 132 R&D and technical personnel, including 50 R&D personnel, and the proportion of R&D personnel in the total number is 10.25%.

At the same time, in recent years, Huicheng Vacuum advocates learning from experts from university research institutes, expanding the strategic deployment of industry-university-research cooperation, and establishing industry-university-research project cooperation with many well-known domestic scientific research institutes, such as Huazhong University of Science and Technology, Wuhan University of Technology, Lanzhou Institute of Chemical Physics, Chinese Academy of Sciences, etc.

As a result, Huicheng Vacuum has formed a good product innovation and R&D capabilities, and has achieved rich project R&D results. As of December 31, 2023, Huicheng Vacuum has a total of 96 patents, including 27 invention patents, 68 utility model patents, 1 design patent, and 7 software copyrights.

Through years of technical research, Huicheng Vacuum has successfully mastered eight core technologies, including vacuum cavity and vacuum system design technology, vacuum environment mechanical device design technology, temperature control system design technology, arc evaporation source design technology, magnetron sputtering target design technology, arc electron beam enhanced ion cleaning device technology, roll-to-roll vacuum coating equipment design technology, vacuum continuous production line design technology, etc., and has built a complete R&D test platform for various functional film systems, which can provide customers in different industries with the research and development of various coating processes. Trial.

In addition, Huicheng Vacuum participated in the formulation of the industry standard of "People's Republic of China Machinery Industry Standard JB/T6922-2015 Vacuum Evaporation Coating Equipment", participated in the "2020 Chinese Academy of Sciences Science and Technology Service Network Plan (STS)", "2020 National Key R&D Program 'Manufacturing Basic Technology and Key Components'" and other projects, and obtained the system certification of integration of industrialization and industrialization, intellectual property management, quality management, environmental management and so on.

In terms of honors, Huicheng Vacuum was awarded the "Vacuum Coating Application Engineering Technology Research Center" by the Guangdong Provincial Department of Science and Technology, a member of the Guangdong Vacuum Industry Technology Innovation Alliance, and won the "China Invention Association Invention and Entrepreneurship Award and Innovation Award", the second prize of Dongguan Science and Technology Progress Award, the China Patent Excellence Award, and the Guangdong Intellectual Property Demonstration Enterprise. In August 2021, Huicheng Vacuum was awarded the title of the third batch of "Specialized, Specialized and New 'Little Giant' Enterprises", and in May 2022, it was approved to set up the "Guangdong Doctoral Workstation".

Fifth, raise funds to expand production and strengthen research to consolidate the foundation for development, and make efforts to enhance growth in four aspects

In this listing, Huicheng Vacuum plans to raise 235 million yuan for R&D and production base projects, vacuum coating R&D center projects and supplementary working capital.

Among them, the "R&D and production base project" has a total investment of 200 million yuan, and it is planned to use the raised funds of 100 million yuan to purchase new production equipment such as plasma cutting machine, nano hardness tester, X-ray diffractometer, etc., and complete the equipment purchase and installation and improve the staffing on the existing basis.

After the project is put into operation, it can improve the production efficiency of Huicheng vacuum, optimize the product structure, enhance its overall scale and comprehensive competitiveness, and meet the growing market demand for vacuum coating equipment.

The total investment of the "Vacuum Coating R&D Center Project" is 75 million yuan, all of which are raised from the raised funds, through the purchase of advanced R&D equipment and the introduction of excellent R&D technical personnel, focusing on R&D in the fields of optical coating, flexible coating, semiconductor coating and other fields. After the completion of the R&D center, it will become a professional R&D center integrating new product development, research and application of new technologies and new processes, and product verification.

Although the vacuum coating R&D center project does not directly produce benefits, the implementation of the project will further improve the R&D system of Huicheng Vacuum, effectively enhance its technical R&D strength, and its benefits will ultimately be reflected in the improvement of Huicheng vacuum production technology, the improvement of process flow, and the reduction of production costs and the improvement of profitability brought about by the introduction of new products, which is conducive to consolidating and enhancing its industry position.

The "Supplementary Liquidity Project" can effectively alleviate the financial pressure faced by Huicheng Vacuum's business development and technology transformation, provide sufficient financial support for its future operations, and enhance the competitiveness of the industry.

Overall, through the implementation of the raised funds investment project, the profitability and core competitiveness of Huicheng Vacuum will be further improved, which will play a positive role in consolidating its existing industry position and expanding the market space for future development.

On the basis of the existing technology and business, Huicheng Vacuum has formulated four specific plans and measures according to the market development trend and development strategy, combined with the use of the raised funds, aiming to enhance the ability of independent innovation, enhance the core competitive advantage and enhance the growth.

First of all, in terms of technological innovation and product research and development, according to the market demand and the development trend of vacuum coating technology, the positioning of new vacuum technology and new products will be determined, and at the same time, the investment in innovation will be increased, the construction of vacuum technology research and development platform will be strengthened, and the intelligent innovation of technology and products will be promoted.

Secondly, vigorously strengthen the construction of R&D team. Huicheng Vacuum will vigorously carry out the action of "attracting talents, cultivating talents, retaining talents, and using talents", so as to enhance its technological innovation capabilities in the field of vacuum coating equipment.

Thirdly, in terms of market strategy and market development, Huicheng Vacuum implements a customer-oriented market strategy, and constantly develops the application of products in downstream fields and improves the product structure while quickly meeting the new needs of customers. In addition, on the basis of continuing to strengthen cooperation with well-known customers at home and abroad, Huicheng Vacuum will establish a nationwide and world-facing sales network, and gradually form a comprehensive product sales system.

Finally, in terms of enterprise management, Huicheng Vacuum will strengthen the construction and planning of corporate culture, deepen the adjustment of organizational structure, improve the level of refined management, and ensure stable production and operation and efficient business operation.

In the future, Huicheng Vacuum will focus on expanding the application fields of consumer electronics, optoelectronic products and semiconductor products, new energy, etc., increase investment in innovation, and is committed to providing diversified and all-round products and services for downstream customers, and strive to develop into a first-class technology enterprise with first-class industry level, sustainable development, independent innovation, rapid growth and high added value.