Yoshioka Precision (NQ: 836720) on the New Third Board currently has a market value of only 400 million, but this small enterprise is a parts supplier for Many well-known enterprises at home and abroad such as Tesla, CATL, Xiaomi Group, Canon, Coworth, Cummins, Makita and so on. So, what's so magical about this small business?
Yoshioka Precision is engaged in aluminum alloy, zinc alloy precision parts production enterprises, the company was just established in 2002 when it was a Japanese-owned enterprise, the founder Zhou Yan from the brother-in-law working in Japan to raise 10 million yen to set up the company, in order to do large-scale company in 2016 from Japanese capital to domestic joint-stock company listed on the New Third Board. The company's core business has three main aspects: electronic and electrical parts, auto parts and other parts.
The company focuses on the field of precision casting and has rich experience in the die casting industry of aluminum-zinc alloy. In the composition of main business income, electronic and electrical parts account for the largest proportion, followed by auto parts and other parts. Among them, the proportion of electronic and electrical parts revenue increased year by year, reaching 54% in 2020; the proportion of auto parts was relatively stable, accounting for an average of 31% per year; while other parts revenue showed a decreasing trend year by year, which was related to the year-on-year reduction of downstream customer orders.
Electronic and electrical components include steam heaters, power tool parts, motors and electronic radiator parts, etc., mainly used in power tools, household cleaners and communication equipment.
In recent years, the sales revenue of such products has continued to grow, and the proportion of revenue is also increasing, which is the main source of income for the company.
Power tools are powered by electric motors or electromagnets, through the transmission mechanism to drive the work head of the mechanized tools such as electric bricks, electric hammers, the company mainly produces electric hammer seats and gear seats and other accessories. Power tool parts in this category of product revenue accounted for the largest proportion, the past three years of the first phase of sales revenue were 93.56 million, 98.93 million, 139.86 million and 94.86 million, in the first half of 2021 power tool parts sales accounted for 69.5% of the sales of electronic and electrical parts, an increase of 20.88 percentage points year-on-year, a rapid growth. Mainly because the cordless trend of power tools continues, driving the replacement of power tools. Power tools are divided into corded and cordless, compared with the cordless structure is light, easy to carry and operate, high efficiency and low energy consumption, the future trend of cordless power tools will continue, is expected to account for 55.7% of the market share in 2024. Referring to the North American cordless power tool market accounted for more than half, and the penetration rate and replacement rate is still rising, the number of domestic cordless power tools in the domestic market accounted for about 1/3, the domestic power tool parts growth space is huge.
Source: Huajing Intelligence Network
At present, the global power tool industry has formed a relatively stable competitive pattern, Makita, Stanley Baide, TTI, Bosch and other large multinational enterprises occupy the main market share, while China's power tool parts industry in the process of undertaking the international division of labor has also developed rapidly, has become one of the world's most important power tool parts supplier countries. At present, the main participants in domestic power tool parts in addition to the company, there are Shandong Weida (002026), Fenglong (002931), Qijing Machinery (603677) and Haichang New Material (300885) and so on. Among them, Weida is the invisible leader of the power tool accessories industry, and its product power tool drill chuck sales rank first in the world for 20 consecutive years; Fenglong is engaged in the research and development and production of garden machinery, automobiles and hydraulic parts, and is the leader in the domestic garden machinery accessories industry; Qijing mainly produces home appliances, automobiles and power tool parts, occupying a leading position in the washing machine clutch market. The company mainly produces accessories such as electric hammer seats and gear seats, and these companies form differentiated competition in their respective segments.
Power tools have maintained high shipments due to their high penetration rate and low value consumability. In recent years, the power tool market has been expanding, the market size of the global power tool industry in 2020 is about 36 billion US dollars, and the global and Chinese power tool production will be 401.5 million and 268 million units in 2020, respectively, benefiting from the trend of electrification and environmental protection in the future, and may continue to increase. According to Data from ChinaMarketMonitor, the market size is expected to reach around $46 billion in 2025, with a five-year CAGR of roughly 5.3%.
Source: ChinaMarketMonitor
Makita, the company's largest customer for power tools, is affiliated with Makita Co., Ltd. as one of the world's large-scale manufacturers specializing in the production of professional power tools, according to Stanley Black & Decker's 2019 annual report data, Makita ranks fourth in the global power tool market, accounting for about 7.18%. The company has had a stable partnership with Makita in recent years, and revenue from such businesses is expected to continue to grow.
The steam mop principle is to heat the water to generate pressure and high temperature, and directly through the high temperature and high pressure steam to disinfect and sterilize, clean the home environment. In 2020, the technical breakthrough of the self-cleaning module of the key technology in the mop solved the problem of the adaptation of Chinese household mop products and released the market demand for China's mopping appliances. According to the data of Aowei Cloud Network, in the first half of 2020, the sales of clean electrical appliances were 9.7 billion, an increase of 7.80% year-on-year, and the sales volume reached 12.16 million units, an increase of 17.80% year-on-year. The mop growth rate has achieved an explosive breakthrough of 260%, and the market share in clean electrical appliances has increased by as much as 12.6 percentage points. Considering that in the context of the epidemic, steam mops are practical, easy to operate and can be sterilized at high temperatures, and the future growth of the market will continue.
In 2020, the sales proportion of domestic cleaning electrical appliances in various market segments and the year-on-year situation
The company's steam heaters are mainly used in steam mops, and sales revenue and proportion have continued to rise in recent years. The sales revenue of the three-year period was 22.68 million, 28.33 million, 50.95 million and 20.67 million, accounting for 24.24%, 28.64%, 36.43% and 21.80% of the electronic and electrical appliances, respectively. The end customer of the product is the world's steam mop industry leader Shark, which has a steady growth in sales at home and abroad, and the industry has better development prospects. As Shark's designated steam heater accessory manufacturer, the company's sales revenue growth is sustainable.
As an emerging category of cleaning appliances, steam mops in 2019 are not widely known, and the retail sales of mops in the first quarter of that year accounted for only 0.5% of all sub-categories of vacuum cleaners, and by the first quarter of 2020, the proportion has reached 7.9%, according to the vacuum cleaner market size of 4.4 billion yuan in the same period, the market size has reached 274 million yuan. Among them, the share of steam mops accounted for 58.6%, considering that steam mops have not been listed in the same period last year, so the growth rate of the reference last quarter was 42%, and the proportion was expanding. Mainly because in January 2020, Li Lanjuan, an expert of the National Health commission, pointed out that the new coronavirus is not resistant to high temperatures, and the 30-minute coronavirus at 56 ° C can die, so the attention of steam mops that can achieve high temperature sterilization has begun to increase, and sales volume and growth rate have continued to rise, becoming a new upstart in the cleaning appliance industry. This also led to the growth of the company's sales, in 2020 the company's steam heater product sales of 50.95 million, an increase of 79.79%.
The proportion of motor and electronic radiator sales declined, mainly due to the rapid growth in sales of power tool parts, but sales revenue remained stable. The proportion of parts for lamps and lanterns is small, and sales revenue has been declining since 2019, mainly due to the company's priority in meeting orders with high gross profit margins and stable procurement under the condition of limited production capacity.
Auto parts include electronic system accessories, filter system parts, steering gear, chassis parts, power, cushioning transmission system parts three parts, mainly used in the body main architecture, vehicle host system, power system and braking system.
Auto parts products in the total revenue accounted for a relatively stable, of which electronic system accessories in the auto parts revenue sales accounted for a decline, the three-year sales revenue of 32.06 million, 37.67 million, 31.23 million and 23.02 million, mainly because of the decline in the production of its downstream customers Sanli lamp led to a decrease in the company's related product orders. Through the development of new users, the company's sales in the first half of this year increased by 55.24% year-on-year, and has rebounded. The sales revenue of automotive engines, steering gears and chassis parts in the three-year phase was 29.19 million, 29.45 million, 35.03 million and 22.53 million, respectively, and the proportion and growth of revenue remained stable.
Automotive lightweighting has driven the company's continued growth in auto parts. Automobile lightweight is an effective way to save energy and reduce emissions. Studies have shown that if the vehicle weight is reduced by 10%, fuel efficiency can be increased by 6%-8%, fuel consumption can be reduced by 10% per 100 kilometers; the European Aluminum Association report shows that for every 100kg reduction in vehicle quality, 0.6L of fuel can be saved per 100 kilometers, reducing CO2 emissions by 800-900g; according to Siemens research, among many energy-saving measures such as power systems and power batteries, automobile lightweight ranks first with 46% energy saving potential.
Aluminum alloy has gradually become the mainstream material for automobile lightweighting. Because aluminum alloy is higher than high-strength steel, the specific strength is high, the density is small, and the weight reduction potential is large; compared with magnesium alloy, the cost is lower, and the molding process and connection method are more mature. In addition, aluminum reserves are large, corrosion resistance is good, recycling rate is high, so it has gradually become the mainstream material for automobile lightweight.
The use of aluminum alloy in pure electric vehicle bicycles increased by more than 40% compared with non-pure electric vehicles. Taking North American light vehicles as an example, compared with non-pure electric vehicles (including fuel vehicles and hybrid vehicles), the amount of aluminum used in pure electric vehicles in North America in 2020 is 643 pounds (291.7Kg), an increase of 41.6% compared with non-pure electric vehicles: among them, the amount of aluminum used in powertrains, fuel transmission and transmission systems is reduced by 24% and 18.9%, respectively, and the amount of aluminum used in pure electric powertrains (motor shells, electronic controls, reducers, etc.) and pure electrical structural parts (body structural parts and coverings, battery shells, etc.) is increased respectively 14.5%、68.9%。 With the increase in the penetration rate of new energy vehicles, the overall amount of aluminum used in bicycles will be greatly improved.
In order to solve the connection problem of mixing various materials, Tesla took the lead in introducing integrated die casting technology, which improves the production efficiency of automobile manufacturing at the same time, or is triggering a revolution in the process and materials of automobile manufacturing, thereby accelerating the use of automotive aluminum alloy materials.
Tesla's integrated die-cast Model Y rear body baseplate, the number of parts reduced from 70 to 1-2. The traditional car back plate structure is welded from about 70 stamped steel plates, Tesla uses the 6000-ton die-casting machine GigaPress to integrate the above 70 parts into 1-2 large aluminum castings, so that the weight of the parts can be reduced by 10%-20%, the number of connection points is reduced from 700-800 to 50, and the manufacturing time is shortened from the original 1-2 hours to 3-5 minutes, which greatly simplifies the manufacturing process and improves production efficiency. According to the plan, Tesla's next plan will be to replace the entire car assembly consisting of 370 parts with 2-3 large die castings, which will further reduce the weight by 10% and increase the corresponding mileage by 14%.
Under the demonstration role of Tesla, the industry actively explores the integrated die casting process. Steel plate is easy to stamp and weld, so it is widely used in the traditional automobile manufacturing process; aluminum alloy is the main material of die casting, with the gradual introduction of integrated die casting, aluminum alloy will also partially replace steel. Integrated die casting is expected to drive a significant increase in the use of aluminum castings. The aluminum alloy casting after the model Y rear body floor integrated casting weighs about 66Kg, and the smaller Model 3 loses about 10-20Kg weight. In the future, after the integrated die casting of the entire car body assembly, the amount of aluminum alloy die casting will be greater. Simply calculated in 66Kg increments, the current single car usage of aluminum alloy castings for European passenger cars and North American light vehicles is 116.0Kg and 135.6Kg, and the amount of aluminum used in bicycles is 179.2Kg and 208.2Kg, respectively, that is, only the back plate integrated casting will increase the amount of aluminum alloy die casting single car use by about 50%, and the amount of aluminum used in bicycles will increase by 30%-40%.
According to the forecast of the International Aluminum Association, the amount of aluminum used in Passenger Cars and Bicycles in China will reach 242.2 kg in 2030, with a compound annual growth rate of 5.77%, and the market prospect is better.
About 30% of the company's operating income comes from the sales of auto parts, in 2020, the company's battery connectors to achieve mass production, its end customers for the Ningde era; starter shell to achieve mass production, becoming a world-renowned automotive manufacturer BorgWarner Tier 1 supplier. In August 2021, LG motor rotor products achieved mass production; in 2021, the motor structural parts products jointly developed with customers have passed the test stage and successfully entered the Tesla supply chain system, and will be applied to Tesla Model 3 and ModelY models in the future. It is foreseeable that the future development of the automotive industry will provide continuous impetus for the market development of the company's aluminum alloy metal parts, and the company has entered a stage of rapid development in the field of automobile lightweight.
Die casting industry is a fully competitive industry, developed countries of die casting enterprises present a small number, a large number of individual scale, high degree of specialization characteristics, in the capital, technology, customer resources and other aspects have a strong advantage, representative enterprises are Japan RYOBI, Switzerland DGS and so on. The concentration of China's die casting industry is low, taking the aluminum alloy die casting parts for automobiles as an example, the larger enterprises are Wencan (603348), Guangdong Hongtu (SZ: 002101), Derivative Technology (SZ: 300176), Ecodi (600933), Xusheng (SH:603305), Tuopu Group (SH:601689) and so on.
Wencan and Ecodi are committed to the production and research and development of automotive aluminum alloy precision castings, and their Chinese can lead the layout of the new integrated die-casting track of electric vehicles, and will become the leader of the track.
The equipment required for aluminum alloy precision castings is mainly die casting machines. The world's largest producer of die casting machines is LK Technology (HK:00558). From the end of 2020 to the present, the company's stock price has risen as much as 20 times, which shows the rapid growth of the demand for aluminum alloy die casting market.
However, due to the fierce competition in the market, the gross profit margins of most of the industry enterprises have shown a downward trend.
Other parts of the company include printer gears, textile machine parts and brake mounts, mainly used in office equipment, textile machines, professional medical beds, etc. The proportion of such products in total operating income is declining. Among them, the main downstream customers of equipment parts such as office equipment and textile machine parts are Canon and Tiemei Machinery, due to the decline in revenue of Tiemei Machinery due to the sluggish textile industry, the company's related product orders have decreased; at the same time, due to the gradual transfer of Canon's production line to Southeast Asia, the company's office equipment parts orders have been correspondingly reduced.
As a metal products manufacturer, the company is in the middle of the industrial chain, purchasing from upstream raw material suppliers, providing metal parts for downstream brand manufacturers, and ultimately applied to end products such as power tools, cleaning appliances and automobiles.
The company's products are mainly based on aluminum alloy ingots and zinc alloy ingots as raw materials, which belong to a perfectly competitive market, the risk of supply shortage is small and the degree of substitution of manufacturers is high, and the procurement is mainly affected by commodity price fluctuations. Among them, the purchase of zinc ingots is small and the price is stable, and the market price of aluminum ingots has increased significantly in recent years, resulting in an increase in the company's procurement costs. In the first half of 2021, the price of aluminum ingots increased by 29% year-on-year, but the company's gross profit margin did not decline, because there was a price adjustment mechanism between the company and major customers, which could transmit the large fluctuations in raw material prices to commodity prices. At the same time, the total procurement of the company's top five suppliers does not exceed 50%, and there is no dependence on a small number of suppliers.
The downstream application scenarios of precision metal products are very extensive, and the company's products focus on the industry market capacity is large, and the future growth is better, but if there is no core competitive advantage, it will be easily replaced. The sales of the company's top five customers account for less than 50%, and the customer concentration is not high.
At present, most of the enterprises in the precision metal products industry have certain production and manufacturing strength, but the overall market concentration is not high, and the operating income of the top ten metal products enterprises accounts for 7.32% of the annual output value of metal products, and there is no absolute leading enterprise at present. The core competitive advantage of the industry is mainly reflected in the independent research and development capabilities, advanced manufacturing technology and stable production capacity and customer resources, which has formed a high barrier for enterprises that intend to enter the metal products industry.
The company's comparable listed companies in the same industry have Shandong Weida (002026. SZ), Qijing Machinery (603677. SH), Fenglong Shares (002931. SZ), Haichang New Material (300885. SZ) and 688678, in the field of automotive components there are 600933. SH), Dongyan Shares (430286) and Wencan Shares (603348. SH）。
Based on the proportion of the main business in the subdivision field, Shandong Weida (002026. SZ) and Fenglong (002931.SZ) as comparable companies for power tool parts, and 600933.SH and Wencan (603348.SH) as comparable companies for auto parts. Compared with these companies, although the company is small, it has formed a differentiated competition, and the products are customized and have certain advantages.
In terms of research and development capabilities, the company currently has 85 patents, including 2 invention patents and 83 utility model patents. The company's independent research and development and invention patent of steam heater, due to its first-mover advantage, currently occupies a leading position in the vertical field of steam heaters, not only the steam mop industry leader Shark designated accessories, but also the cooperation with Xiaomi Company has also entered the stage of product sample modification. The company's independent research and development and cooperative research and development of the product part has achieved mass production, and successfully entered the supply chain of internationally renowned companies such as Tesla, LG and Ningde era. In general, the company has a certain degree of independent research and development capabilities.
The actual controller of the company, Zhou Yan, and his wife Zhang Yuxia jointly hold 88.53% of the shares, while Zhang Yuxia's family holds 9.27%, which shows this typical family business. Since the company was listed, it has paid dividends almost every year, which shows that it has earned real money and silver.
The company's operating income in the three-year period was 200 million, 208 million, 260 million and 170 million, respectively, with a compound annual growth rate of 9.24%. The non-net profit of the three-year period was 24.23 million, 26.82 million, 42.84 million and 27.99 million, respectively, with a compound annual growth rate of 20.92%, and the growth rate was good. The company's revenue and net profit growth in recent years are mainly due to the substantial increase in sales revenue of the company's self-developed star product steam heater, on the other hand, it comes from the company's large customer Makita power tools sales increased significantly, which led to the growth of the company's related spare parts sales.
In terms of profitability, the company's three-year gross profit margin was 23.37%, 26.8%, 29.63% and 29.84% respectively, and the growth trend was more obvious. Mainly because the company adjusted the product sales structure and increased the proportion of sales revenue for parts and components for steam heaters and filter systems, the sales volume of products with higher gross profit margins increased. The company's gross profit margin level has increased year by year, which is slightly higher than the industry average. It can be seen that the company's strong research and development capabilities have enhanced product competitiveness.
The net cash flow generated by the company's three-year operating activities was 20.03 million, 36.59 million, 25.49 million and 14.26 million, respectively, and the net cash flow generated by operating activities was relatively sufficient, reflecting the company's good ability to obtain funds and operate. The company's asset-liability ratio is 53.95% (industry average 39.69%), which is higher than the industry average; the current ratio is 1.28 (industry average 2.31), and the quick ratio is 0.81 (industry average 1.75), both of which are lower than the industry average. And mainly short-term borrowing, there is a certain liquidity risk. However, considering that the company's capital structure is still within a reasonable range, there is no major contingent liabilities and profitability is strong, and the overall risk is controllable.
In terms of payment collection capacity, the company's accounts receivable have continued to increase in recent years, which is related to the continuous expansion of the company's business scale. However, the concentration of the top five customers in accounts receivable is not high, and they are the company's main customers, with good credit status and less risk of bad debts.
The company plans to raise 200 million yuan, mainly for the intelligent transformation of production lines and supplementary working capital. Due to the consideration of business scale expansion, the company's existing production capacity can no longer meet the growing needs of the market and downstream customers. From 2018 to 2020, the company's production capacity is 28.11 million pieces, 28.61 million pieces and 35.71 million pieces, respectively, and the annual output of the planned project will increase by 29 million pieces after the completion of the project, and the production capacity will be almost doubled, which will effectively improve the company's supply capacity. It is expected that full capacity production will be achieved within three years after the completion of the project, which will bring the company an annual revenue growth of 260 million yuan and a net profit growth of 57.19 million. Considering that the company's product sales have increased significantly in recent years, the capacity utilization rate has remained above 90% per year on average, and the current situation of insufficient production capacity has been coped with by reducing products with relatively low gross profit margins, there are more potential customers in the downstream and the orders in hand have increased year by year, and the construction of the project is reasonable.
The company's issue reserve price is 10.5 yuan per share, corresponding to a static price-earnings ratio of 16.66 times in 2020 and a TTM price-earnings ratio of 16.72 times in 2021. The industry's average static price-to-earnings ratio is 29.14 times, and the valuation gap between the company and comparable companies is obvious.
Note: The sharp decline in profits of Wencan shares in 2020 has led to a static P/E ratio that is too high, and the reference value is not large, so it is excluded
Some risk factors to focus on. 1. The company's accounts receivable account for a relatively high proportion, and short-term liabilities are more, there is a certain liquidity risk; 2. With the continuous expansion of the company's business scale, there is a certain risk of increasing the scale of inventory. 3. At present, the competition in China's metal products industry is becoming increasingly fierce, if the company can not continue to carry out R & D innovation and business model upgrades, it will be in a disadvantageous position in the market competition.
Summary: This is a small and beautiful precision parts production company, with independent research and development and mass production of core products, is the invisible leader in the field of steam heater segmentation. In recent years, the company's operating income has grown rapidly, its profitability has been continuously enhanced, and its product market development prospects are promising. Several downstream industries are in high prosperity and have entered the supply chain of major customers: Shark, LG Electronics, Tesla, CATL, Xiaomi Group, Cummins, etc. With the increase in the penetration rate of power tools and clean small household appliances, the trend of automobile lightweighting has increased the amount of aluminum alloy die castings, and the binding of the company and large customers in the industry, it is expected that the company's performance will continue to improve.
【Special note】The data and information in the article come from the company's financial report, brokerage research report, industry report, enterprise official website, public number, Baidu encyclopedia and other public information, I strive to report the content and views of the article objective and fair, but do not guarantee its accuracy, completeness, timeliness, etc. The information or opinions in this article do not constitute any investment advice, investors are responsible for any investment behavior at their own discretion, and I am not responsible for any direct or indirect losses arising from the use of the contents of this article. For more in-depth analysis of the Beijing Stock Exchange and the New Third Board, welcome to pay attention to @Anfushuang focusing on the Beijing Stock Exchange