(Report Producer/Author: Essence Securities, Zhu Haibin)
<h1 class="pgc-h-arrow-right" data-track="2" >1. Company Profile: Focus on precision casting, three core businesses to build a solid moat</h1>
1.1. Focus on precision casting and carry out in-depth cooperation with many internationally renowned brands
Yoshioka Precision is a precision parts manufacturing enterprise engaged in precision casting of aluminum and zinc alloys. The company's self-developed and invented steam heaters are widely used in cleaning small household appliances such as steam mops; it is the designated supplier of steam heaters for Shark, the leader in the steam mop industry. The company's steam heater products are also favored by well-known domestic small household appliance manufacturers, and the company is currently cooperating with Xiaomi and has entered the stage of product sample modification. In the field of auto parts, the company has a wide layout while digging deep into the potential of the new energy market. The motor structure products developed by Yoshioka Precision and customers have passed the relevant tests and will be used in tesla model 3 models. The company's self-developed motor rotor products have also passed the test stage and will be applied to LG's motor products.
1.2. Main business: three major products, covering home appliances, power tools, automobiles and other fields
Yoshioka Precision focuses on the field of precision casting and has accumulated rich experience in the aluminum-zinc alloy die casting industry. At the same time, the company actively develops and innovates on the basis of the downstream market demand, and expands the market in the field of clean home appliances through exclusive patented products - steam heaters. Overall, the company's operating income in 2020 is 260 million yuan, and the CAGR in 2014-2020 is 28.04%. Judging from the latest data, the company's 2021H1 generated revenue of 170 million yuan, an increase of 64.47% year-on-year.
Through years of accumulation in the field of die casting and precision machining, the company has continuously developed downstream application scenarios, and finally formed a product lineage covering a variety of application scenarios such as office equipment, textile machinery, and professional medical beds, mainly electronic and electrical components and auto parts. In addition, the company relies on its own proprietary technology to create steam heater products, and has also begun to emerge in the field of cleaning home appliances, through cooperation with international leaders, broadening its own profit channels.
Electronic and electrical components business
The company's electronic and electrical business mainly includes steam heaters, power tool parts, motors and electronic radiator parts and other products, widely used in various types of power tools, household cleaning appliances, communication equipment and other fields.
The company's electronic and electrical business mainly includes the cleaning home appliance parts business and power tool parts business mainly based on steam heaters. In addition, the company's electronic and electrical business also involves communication equipment, lamps, motors and electronic heat dissipation parts. Among them, the power tool parts business accounted for the highest proportion, in 2021H1, the power tool parts business generated revenue of 65.9375 million yuan, accounting for 70% of the electronic and electrical business, followed by the steam heater business, with revenue of 20.677 million yuan, accounting for 22%.
Auto parts business
The company's auto parts products include electronic system accessories, filter system parts, steering gear, chassis parts, power, cushioning, transmission system parts, etc., the application areas include body main structure, on-board host system, power system and braking system.
The company's auto parts business mainly includes automotive electronic system parts, chassis, steering, engine system parts and filter parts business. Overall, the company's auto parts business has grown steadily, and since 2020, the company has grown rapidly under the drive of new energy vehicle-related businesses. From the perspective of business composition, the company's electronic system accessories and chassis, steering and other system business accounted for 39% and 38% respectively, and the filter-related accessories business accounted for a relatively small proportion because it is a new business just developed by the company.
The company's automotive electronic system accessories, mainly for Japan and South Korea and other overseas auto manufacturers, downstream customers are mostly Denso Tian, JiMingmei, SHIMODA and other international large auto parts suppliers, so its sales are greatly affected by overseas markets.
Automotive engine speed and cushioning, steering, chassis parts mainly include fluid conduction plates, inner cylinders, covers and other parts. Downstream customers include Bridgestone, BorgWarner, Xiaosheng Motor (Shanghai) Co., Ltd., Xinxiang Adiwei Automotive Technology Co., Ltd. and other well-known enterprises at home and abroad. Revenue in 2020 was RMB35.0311 million, an increase of 18.95% year-on-year. Compared with the electronic system business, the company's chassis parts and components product terminal applications are more in the domestic vehicle, so it has benefited from the recovery of the automotive industry since 2020, and the growth is obvious.
The company's filter-related parts business and international well-known commercial vehicle engine brand Cummins in-depth cooperation, the company will be more than 90% of the filter-related parts to Cummins and its filter manufacturer Zhaomin Technology. In 2020 and the first half of 2021, the revenue was 15.8205 million yuan and 13.3029 million yuan, respectively, accounting for 19.27% and 22.60% of the auto parts business.
Other parts business
In addition to the above two main businesses, Yoshioka Precision relies on its own R&D capabilities and manufacturing capabilities to further expand its product lineage and enrich downstream application scenarios. At present, the company's other parts and components products are mainly used in office equipment, textile machines, professional medical beds and other scenarios.
The company's other types of parts mainly include equipment parts, molds and other parts. Among them, the main equipment parts refer to textile machinery and office equipment parts, the main downstream customers of this type of business are Tiemei Machinery and Canon, and the revenue of equipment machinery in 2021H1 is 4.7586 million yuan, accounting for 31% of other businesses.
Mold business, mainly the company's corresponding products in the production of the need to open the mold, and this part of the cost by the downstream customers to bear, the company relies on its own technical strength, before selling products through the sale of molds, reduce their own research and development risks. 2021H1 mold business revenue of 7.9972 million yuan, accounting for more than 50%.
Other major customers of parts include Wuxi North Lake Light Optoelectronics Co., Ltd., Vela Eurasia Limited and Dalian Daimaru Industrial Co., Ltd., providing products such as covers, sleeves and valves.
1.3. Fundraising projects: Raise 200 million yuan, mainly for upgrading production lines and expanding production capacity
Yoshioka Precision intends to publicly issue no more than 26.45 million shares to qualified investors (taking into account the over-allotment option), the public shareholding ratio after the issuance is not less than 25% of the total share capital of the company, and the funds raised after deducting the issuance expenses intend to invest in the intelligent transformation project and supplementary working capital of the production line with an annual output of 29 million precision machinery parts.
An intelligent transformation project with an annual output of 29 million precision mechanical parts production line
At present, the company has three major product lines, covering cleaning home appliances, power tools, communication equipment, auto parts and other fields. Due to the company's deep cultivation of downstream demand and the continuous expansion of its business, the company's production capacity has gradually become the main factor restricting the further growth of the company's scale.
The investment project will renovate and upgrade the existing production line and expand production capacity by purchasing equipment such as CNC machine tools, machining centers and intelligent robots. After the fundraising project reaches production, it will effectively improve the company's production capacity and production efficiency, further adjust and improve the company's product structure to adapt to changes in the downstream market, and expand the scale of enterprise operation by providing customers with higher quality products.
1.4. Shareholding structure: the founder is the actual controller, and the equity structure is stable
According to the prospectus, the total share capital of the company before the issuance was 67.38 million shares, and the founder of the company, Zhou Yan, was the actual controller, who directly controlled 60.60% of the company's equity, in addition to Zhou Yan's wife Zhang Yuxia controlled 27.93% of the company's equity, and the two, as the actual controllers, jointly controlled 88.53% of the company's equity. In addition, Zhou Yan's father-in-law, mother-in-law and sister-in-law collectively controlled 9.27% of the company's equity as co-actors.
<h1 class="pgc-h-arrow-right" data-track="34" >2. Financial performance: 2021H1 Attributable net profit increased by 86.21% year-on-year, and the expense ratio was controlled below 10% all year round</h1>
Since 2014, the company's performance can be divided into three main stages:
2014-2017: The company developed rapidly at this stage and expanded rapidly, with a CAGR of 94.06%. At this stage, the company's core products are still precision cast aluminum components, and the core downstream markets are textile machinery and office equipment.
2017-2019: At this stage, the company entered a period of stability, with net profit attributable to the parent steadily growing in the range of 20 million to 30 million. The market in the field of office equipment and textile machinery has been relatively mature, the company actively transformed at this stage, on the one hand, the company increased investment in the field of steam heaters, successfully became shark's designated parts supplier; on the other hand, the company actively developed the power tool business, successfully became a series of well-known power tool manufacturers such as Makita, Bosch and a series of well-known power tool manufacturers parts suppliers.
2020-present: The company is based on the previous transformation, accumulating thick and thin. In 2020, the net profit attributable to the mother was 43.4772 million yuan, an increase of 60.23% year-on-year; the net profit attributable to the mother in the first half of 2021 was 28.7297 million yuan, an increase of 86.21% year-on-year. Affected by the epidemic, the demand for clean home appliances in 2020 expanded rapidly, and the company's performance once again entered a rapid upward range; at the same time, the company's accumulation in the field of power tools has achieved initial results, the company has deeply cultivated the supply chain of the Makita system, and gradually expanded its share in the supply chain system of Makita and its upstream parts suppliers, and the proportion of power tool business revenue in 2020 and the first half of 2021 has continued to expand. In addition, the company took advantage of the chase, increased investment in new energy auto parts, and successively entered the supply chain system of high-end brands such as Cataline Times, LG Electronics, Tesla, and BorgWarner.
From the perspective of profitability, the company's gross profit margin and net profit margin increased significantly, and the gross profit margin and net profit margin of the company in 2021H1 were 29.84% and 16.90%, respectively, compared with 13.57pct and 10.62pct in 2014. The company's profitability has improved significantly, first of all, the company's technology accumulation is deep, and the added value of products is improved; in addition, the company is deeply involved in the downstream terminal leader, participating in the research and development, design and production of customer products, and the right to speak in the industrial chain is continuously enhanced; finally, the company's cost control ability is strong. From the perspective of expenses, the overall expense ratio during the period remained at about 8%, of which the R&D expense rate was about 4%, which was close to half of the overall expense. The sales expense ratio has decreased year by year, from 2% to 1%, but the company's new customers are mostly LG, Tesla, Ningde Times and other international well-known brands, which shows the quality of the company's products. The company's management expense ratio remains in the range of 2%-4% all year round.
From the perspective of long-term solvency, the company's overall debt level is stable, and the asset-liability ratio has remained in the range of 50%-60% in recent years. From the perspective of short-term solvency, the company's current ratio has been lower than 1.5 for many years, the quick ratio is about 1, and the inventory pressure is larger, but the solvency is relatively stable.
The company's overall profitability is good, with a net inflow of operating cash flow from 2014 to 2021H1. The company's cash inflow in 2020 was 25.4974 million yuan, down 30.32% year-on-year, mainly due to the expansion of the company's production scale in the second half of the year, the corresponding raw material purchase and personnel compensation increased significantly. 2021H1 Operating cash inflow of 14.2688 million yuan, an increase of 98.01% year-on-year, on the one hand, sales in the first half of 2021 compared with the first half of 2020 have improved, on the other hand, it is also due to the increase in cash receivables carried forward in the second half of 2020.
<h1 class="pgc-h-arrow-right" data-track="44" >3. Industry space: power tools + cleaning appliances + electric vehicle combination punch, the market prospect is broad</h1>
The company is mainly engaged in the research and development, production and sales of aluminum alloy and zinc alloy precision parts. According to the Guidelines for the Classification of Listed Companies (revised in 2012) issued by the China Securities Regulatory Commission, the company's industry is C33 metal products industry, and according to the National Economic Industry Classification (GB/T4754-2017) and the Guidelines for the Classification of Managed Industries of Listed Companies, the company's industries belong to the C33 metal products industry, and the sub-categories are classified as C3311 metal structure manufacturing.
The company's aluminum alloy and zinc alloy precision die casting is one of the most widely used and fastest growing metal hot processing process methods in precision metal manufacturing. Due to its many advantages of lightweight material, strong wear resistance and high mechanical strength, it is more in line with the requirements of precision, lightweight, energy saving and greening of metal products in the modern manufacturing industry. Therefore, precision metal parts are widely used in automobiles, home appliances, electronics, machinery and many other industries, and in the future emerging industries such as robotics, high-speed rail, aerospace, new energy and medical industries will further enhance the scale of precision die casting technology application market.
3.1. Benefiting from the epidemic home economy, the global demand for clean home appliances has grown rapidly
The company's steam heater products are mainly used in steam mops and other steam cleaning appliances: steam mops are principled by heating the water, generating pressure and high temperature, directly through high temperature and high pressure steam to disinfect and sterilize, clean the home environment, so it generally has high temperature sterilization, remove oil and other functions.
Steam mop mainly deep cleaning, multi-scene application to improve the use of satisfaction: the basic steam mop product uses high temperature steam to achieve deep cleaning, after cleaning the ground dry and odorless; in addition, the upgraded "steam mop" can be applied in multiple scenarios: sofa bed products, ground space, clothing textile can use the advantages of steam to dry and clean quickly.
From the perspective of global totals, the growth demand for clean home appliances in 2016-2019 remained stable, with an average annual compound growth rate of 7.19%; in 2020, affected by the epidemic, the home economic model promoted the growth of global demand for clean home appliances, and the market size of clean home appliances in 2020 was 28.543 billion US dollars, an increase of 25.27% year-on-year.
From the perspective of market segmentation, the scale of the clean home appliance market has grown significantly. From the perspective of the Chinese market, the cagr of clean home appliances in 2016-2019 was 28.04%, and in 2020, it increased by 20.06% year-on-year, and the overall growth was relatively fast. The growth of overseas markets in 2016-2019 is relatively slow, mainly because the main audience of clean home appliances, the developed countries in Europe and the United States, have become more mature and it is difficult to achieve large-scale growth. The growth rate of overseas markets in 2020 exceeded expectations, mainly due to the outbreak of the epidemic overseas, and the demand for cleaning products, especially sterilization and disinfection products, expanded rapidly.
Domestic market: Most of the situation of hard ground determines the coexistence of domestic sweeping and wiping demand, and the demand for wiping is more intense. More than 70% of households said they mopped the floor more than once a week, and more than 60% said it took more than 20 minutes each time.
In 2020, under the catalysis of the epidemic, the consumption habits of clean home appliances are expected to be reshaped: affected by the epidemic, people's health awareness will be raised to a new height in 2020, and the demand for cleaning of the living environment will be continuously released, in addition to vacuum cleaners, but also led to the development of a series of clean home appliances such as steam mops and scrubbers. According to the State Grid of China, the sales scale of steam mops increased by 132.6% year-on-year, accounting for 58.64% (+17.12pct) of mop sales, accounting for 5.24% of the total sales of clean home appliances.
Market space measurement
Overseas market space: Due to the long history of the use of steam mops in the European and American markets, the market penetration rate has been relatively saturated, and the penetration rate in 2019 is close to 10%, and we believe that its subsequent growth rate will be close to the market average, so the market growth rate is used as its growth rate to estimate the market size. At the same time, considering that the global epidemic has begun to ease with the popularization of vaccines, so the overseas growth of clean home appliances will gradually slow down, we expect overseas clean home appliances to grow by 20%/15%/10% year-on-year in 21/22/23.
Domestic market space: different from the mature markets in Europe and the United States, the overall penetration rate of clean home appliances is relatively low, the clean home appliances represented by traditional vacuum cleaners have not completed education for the domestic market, so the market is more likely to accept the user education of emerging products, and with the rise of clean home appliances driven by the epidemic, once the consumption habits of the market are formed, it is easy to form the user mind, thereby further strengthening the market share of related products.
3.2. The kinetic energy of the power tool market is switched, and the overall growth of the market is stable
Power tools have maintained high shipments due to their high penetration rate and low value and easy-to-consume product attributes. From 2017 to 2019, the power tool market has been expanding, and the main driving factors are the continuous expansion of the application range of power tools in the industry and the increasing demand for DIY in household scenarios. Overall, China's power tool industry has maintained a high growth rate in the past 5 years, with an average annual compound growth rate of 14.19%.
From the perspective of downstream demand, the power tool market can be subdivided into domestic markets and overseas markets. From the perspective of the domestic market, benefiting from domestic economic growth, the market growth is stable. In 2020, the market suffered from the impact of the epidemic, and the construction progress in the field of real estate decoration in the main downstream application scenarios was slow, and the market is expected to pick up as the epidemic gradually eases. Overseas demand In the short term, in 2020, benefiting from the growth of home DIY demand brought about by the overseas epidemic blockade and the ease of the international trade situation of overseas construction difficulties, the growth rate of China's power tools exports has increased. In the long run, market demand will still return to normal and maintain stable growth.
The global power tool market is divided into two markets: domestic and foreign. Since the development of the entire power tool market is relatively mature, so its price as a whole remains stable, we assume that the price of power tools at home and abroad in the next three years will be consistent with recent years, according to the average price of the first three years.
From the perspective of overseas markets, due to the impact of the overseas epidemic, on the one hand, the consumption of overseas engineering and production power tools has been impacted; on the other hand, European and American countries have a strong DIY atmosphere, so the demand for consumer power tools has increased significantly. Therefore, we assume that the growth of overseas demand for power tools will remain at a high level in the next two years. At the same time, with the easing of the epidemic and the decline in consumer demand, the demand for engineering tools will rebound.
From the perspective of export sales, the overall export of power tools in China is relatively stable relative to the demand of overseas markets, roughly between 1/3-1/2 in overseas markets. In the next three years, taking into account the trend of gradually easing the epidemic situation overseas, it is predicted that the growth rate of exports will gradually slow down in the future.
From the perspective of domestic sales, China's overall market demand has grown rapidly, the annual growth rate in the past two years has remained above 10%, the domestic DIY atmosphere is lighter, and power tools are mainly based on production and decoration tools. Due to the better control of the domestic epidemic and the weak impact of the epidemic on production, we have reason to believe that the demand for domestic power tools in the future is less likely to have an impact, and the market growth will remain stable.
3.3. Lightweight + new energy two-wheel drive, automotive cast aluminum parts space is vast
With the rapid growth of the national economy, the automotive industry has developed by leaps and bounds. In the past two years, affected by the economic situation at home and abroad, China's automobile production and sales have declined slightly, but the base is relatively high, and the scale of new production and sales each year still maintains a high level. As of the end of August 2021, the number of vehicles in the country reached 296 million units, an increase of 8.15% over the same period last year. In 2020, although the first half of the year was hit by the epidemic and the entire automobile market was cold, from the perspective of annual sales, the national sales volume was 25.2676 million units, down 1.89% year-on-year, curbing the market decline. In the first half of 2021, the auto market rebounded out of the V-shape, and the national automobile sales volume was 12.8785 million units, an increase of 25.89% year-on-year.
The relevant national policies to help the development of the automotive industry, the automotive industry still has a good space for development: China has introduced a number of policies to promote automobile consumption, which is expected to effectively stimulate the domestic automobile consumption market, which has an important role in boosting the automotive industry and its upstream and downstream industries.
From the perspective of the passenger car market, sales in the first half of 2021 were 9.9941 million units, an increase of 27.37% year-on-year. In the first half of 2021, China's new energy vehicle sales reached 1.194 million units, an increase of 223.27% over the same period last year.
On the one hand, due to environmental protection requirements and factors such as industrial curve overtaking, China's policy resources are obviously biased towards the field of new energy vehicles. In October 2020, the Standing Committee of the State Council passed the "New Energy Vehicle Development Plan 2021-2035" compiled by the Ministry of Industry and Information Technology, proposing that "by 2025, new energy vehicle sales will account for 25% of total vehicle sales, and by 2030, new energy vehicles will form a competitive advantage in the market, with sales accounting for 40% of the total sales of vehicles in that year", and the strong support of the policy will promote the further expansion of the new energy vehicle market scale. On the other hand, the maturity of new energy-related technologies and industries and the abundance of models are also important factors in the rising penetration rate of new energy vehicles.
From a global perspective, under the improvement of the contradiction between energy supply and demand, the strict standards of governments for energy-saving and new energy vehicle fuel consumption are effectively promoted by automobile lightweighting, and countries have raised fuel consumption standards. Countries have issued standard regulations for fuel consumption in passenger cars in 2020 and the future to promote the development of energy-saving technologies for automobiles. At the same time, China's clear phased lightweight goals have also laid the foundation for automobile lightweighting.
With the promotion of automobile lightweighting, the amount of aluminum used in china's bicycles has gradually increased, especially for passenger cars. According to the statistics of the Nonferrous Metals Industry Association, in 2010, the average amount of aluminum alloy used in passenger cars in China was only 99KG, with the technological progress of domestic enterprises, more types of aluminum alloy parts were widely used in automobiles, and the amount of aluminum used in bicycles was significantly improved, reaching 128 KG/vehicle by 2016. Only equivalent to the level in Europe and the United States in 2008. With the promotion of policies and the development of new energy vehicles, this value has been significantly improved in 2017 and 2018, rising to 142 KG/vehicle in 2017 and 156 KG/vehicle in 2018, and the application of aluminum alloy has accelerated significantly. According to the forecast of the International Aluminum Association, the amount of aluminum used in passenger cars in China will reach 242.2 kg in 2030, with a compound annual growth rate of 5.77%.
Through the two aspects of single-vehicle aluminum and automobile sales, we calculated that the overall cast aluminum use of the automotive industry in the next three years was 6.3762/772.62/889.28 million tons, and at the same time, according to the company's prospectus, we calculated the average price of cast aluminum products per ton, and found that the average price stability was high, so the average price of the previous year was taken as the price of cast aluminum products in the future market.
<h1 class="pgc-h-arrow-right" data-track="78" >4. Competitive advantage: based on technology to create high-quality products, and carry out in-depth cooperation with downstream leaders</h1>
4.1. Technical advantages: 85 patents to create core products
Yoshioka Precision focuses on technology research and development and accumulation, and relies on technology to build core competitiveness. The company's R & D expenditure has increased year after year, 2021H1 R & D expenditure of 7.1274 million yuan, an increase of 76.62% year-on-year, 2015-2020 The company's R & D expenditure CAGR reached 33.92%. From the perspective of R & D department personnel, the company's R & D department personnel grew rapidly, 2021H1 The company's R & D department has a total of 82 people. Judging from the research and development results, the company currently has 85 patents, including two invention patents and 83 utility models.
Steam heater
The most important application scenario of the company's steam heater is steam mop, its end customer is the world's leading steam mop brand shark, and the company is the designated steam heater supplier of the Shark brand, so it is OEM-produced for its well-known cleaning appliance manufacturers such as Cobos and Ningbo Haige are using Yoshioka precision production steam heating decoration. From 2018 to 2020, the average annual compound growth rate of steam heating and loading was 49.88%.
Of the 85 patents held by the company, 2 invention patents and 6 utility models involve steam heating and installation. Yoshioka Precision with a unique patented technology to create steam heating products, through product structure design and development so that steam heater to achieve fast heating, high heat utilization rate, strong adaptability, suitable for flipping operations, while avoiding the clogging of steam outlet, reduce manufacturing costs, product performance in the same kind of products are more advanced.
Precision casting
Through the establishment of a professional R & D team, Yoshioka Precision began to participate in the research and development of terminal products from the design process, relying on R & D capabilities and technical advantages to create a strong customer relationship. The company puts forward solutions for product structure, assembly methods, etc., assists downstream customers to solve some production and assembly problems in the field of metal parts from the source, optimizes their product quality, stability and manufacturing accuracy, reduces the defect rate, and improves the quality of terminal products.
4.2. Customer advantages: focus on core products, and carry out in-depth cooperation with downstream leaders
Relying on the advantages of R&D technology and the control of product quality, the company has successfully gained a firm foothold in the field of precision casting and cleaning of small household appliances, and has established a good cooperative relationship with leading enterprises in the corresponding fields, and the main customers include Makita, Coworth, Canon, A.O Smith, Bosch, Cummins, Wandu Chassis, Dongfeng Automotive, Denso Tian, BorgWarner, Sanli Lamps, Bridgestone and other well-known enterprises at home and abroad.
Highly bound to the shark steam mop business, the world's leading clean small household appliance: The company's steam heating and installation is favored by downstream customers with its own unique process structure. Shark, a leader in the field of steam mops, highly recognizes the company's products and designates Yoshioka Precision as its core component steam heater supplier.
According to Frost & Sullivan, Shark achieved a 28.50% sales share in the US steam mop market in 2018. According to Aowei Cloud Network, Shark Steam Mop 2019-2020 won the Tmall Steam Mop Industry Sales Champion for two consecutive years.
In 2020, with the background of technological upgrading making mopping appliances a labor replacement tool and the epidemic's health awareness education for the global market, the market demand for clean small household appliances has further increased, and steam heater products have ushered in a huge market space. With the rapid development of smart home appliances, in 2021, the company has been favored by more high-quality customers with the core technology and excellent quality of the product, of which Xiaomi actively seeks cooperation in research and development, and the current modified steam heater products are in the prototype modification stage.
Power tools
After years of development, the global power tool market has formed a relatively stable competitive pattern. Among them, Makita, Stanley Bader, TTI, Bosch and other large multinational companies occupy the main market share, according to Stanley Black & Decker's 2019 annual report data CR5 is 49.67%.
The power tool business grew steadily: the company was deeply involved in the field of precision parts for power tools. Since 2018, the power tool business has accounted for more than 25%, and the revenue of 2021H1 is 62.2814 million yuan.
The company deeply cultivates the supply chain of the Makita system: since 2012, it has cooperated to provide it with gear seats, electric hammer seats, bearing seats, cylinder pipes and other products. 2021H1 The company directly provided product sales of 51.7503 million yuan to Makita, accounting for 30.43% of the company's revenue for that year, accounting for about 10% of the purchase amount of similar products in Makita in that year; with Makita as the end customer, 2021H1 provided product sales of 10.5311 million yuan to Gao Sheng Precision, the midstream supplier of Makita Tools, accounting for 6.19% of the company's revenue for the year and 90% of the amount of similar purchases in gao Sheng's precision year.
Auto parts
About 30% of the company's operating income comes from the sale of auto parts, and the revenue of the auto parts business in 2021H1 is 58.8601 million yuan, an increase of 68.19% year-on-year. The company's top five customers in the first half of 2021 are Cummins, Zhaomin Technology, Gates Resort, Sanli Lamps and JiMingmei.
In the automotive field, the company is currently committed to assisting downstream manufacturers to achieve vehicle lightweighting, and actively developing new energy vehicle-related business. The company's project development in the field of new energy has been fruitful, and has successfully entered the Tesla supply chain system, and the motor structural parts products jointly developed with customers in 2021 have passed the test stage and will be applied to Tesla Model 3 and Model Y models; in August 2021, LG motor rotor products will be mass-produced and will be applied to LG's motor products. In 2020, the company's battery connectors will achieve mass production, and its end customers will be THE NINGDE era; the starter shell will achieve mass production, becoming a first-class supplier of BorgWarner, a well-known global automobile manufacturer.
<h1 class="pgc-h-arrow-right" data-track="102" >5</h1>
5.1. Competitive landscape: The application scenarios of the foundry industry are diverse, and a leader has not yet been formed
The company is in the precision casting industry, the downstream application scenarios are extensive, for different downstream industries, the technical requirements of the product, the response speed and other aspects of the requirements will have certain differences, so the industry players will be based on their corresponding downstream deep ploughing, resulting in obvious differentiation of the foundry industry. According to the 2020 annual statistical report of the National Bureau of Statistics, the operating income of the top ten metal products enterprises in China totaled 269.341 billion yuan, accounting for 7.32% of the annual output value of metal products, and it has not yet formed an absolute leading enterprise in the precision metal products industry. The company's main customers in the field of precision casting are concentrated in power tools, automobiles and other fields, and we will analyze the competitive landscape of the company's industry from the dimensions of these two major downstream areas.
Power tool parts field
China's power tool industry mainly benefits from economic globalization and international division of labor, with China's perfect industrial system and broad market space, China in the power tool industry upstream parts supply industry to gain a firm foothold, at present China has become one of the most important power tool parts supplier countries in the world. Companies mainly engaged in power tool parts in the field of precision casting include Companies in the Shanghai and Shenzhen markets such as Shandong Weida, Fenglong Shares, and Qijing Machinery.
Auto parts
China's auto parts industry is more complex than the power tool parts industry, due to more auto parts, coupled with the rise of new energy vehicles, auto casting parts themselves are diverse; in addition, the automotive industry for different systems, different levels of parts requirements are also inconsistent. According to the relevant data of the National Bureau of Statistics, as of the end of 2020, the number of units of Auto Parts and Accessories Manufacturing Enterprises in China was 14,018, and the total annual main business income was 3,631.065 billion yuan. According to the classification of secondary industries, There are a total of 164 listed auto parts enterprises in China, and the operating income in 2020 is 864.869 billion yuan, accounting for 23.82% of the total annual main business income of the national auto parts and accessories manufacturing enterprises, and the industry CR10 is only 13.52%, the competition is fierce, and the overall pattern is small and scattered.
5.2. Comparable companies: The gap between the size of the company's profits and comparable companies is small, and the profitability is relatively good
We selected three companies for financial comparison based on the main application scenarios of Yoshioka precision products , power tool parts and auto parts industries. All three companies are engaged in precision casting and processing industries. Its Chinese can specialize in die casting focus on the automotive industry, in addition, Fengguang Precision and Qijing Machinery are more similar to Yoshioka Precision, and the downstream application scenarios are extensive, of which Fengguang Precision is more similar to the company's business in the field of auto parts, and Qijing Machinery is more in line with the company's business in the field of power tools, and it is more comparable.
From the perspective of operating income scale, Wencan shares and Qijing Machinery are larger. Benefiting from the recovery of the automotive market in 2020, Wencan shares, which have declined in their original performance, grew rapidly, with revenue of 2.603 billion yuan, becoming the largest company among comparable companies. The revenue scale of Fengguang Precision and Yoshioka Precision is relatively small, with revenue of about 100-200 million yuan.
From the perspective of net profit attributable to the mother, Wencan shares and Qijing Machinery are still relatively high, but since 2019, the gap between the net profit of the four companies attributable to the mother has narrowed significantly. Compared with Wencan shares and Qijing Machinery, Fenglong shares, Yoshioka Precision and Fengguang Precision have maintained a relatively stable growth. Among them, Yoshioka Precision has grown significantly, from 10.4697 million yuan in 2016 to 43.4772 million yuan in 2020, surpassing Fengguang Precision and greatly narrowing the net profit gap with Qijing Machinery.
From the perspective of gross profit margin, the growth trend of Yoshioka Precision is obvious, and in 2019, it "surpassed" Wencan shares, and the gross profit margin of 29.84% in 2021H1 was second only to Fengguang Precision. The gross profit margin of Fenglong Shares and Fengguang Precision has risen steadily, and it is at the forefront of comparable companies. The gross profit margin level of Wencan shares and Qijing Machinery is slightly inferior to that of Fengguang Precision and Yoshioka Precision.
From the perspective of net interest rate, it can be more obvious than the company's net interest rate differentiation, and the net interest rate of the five companies in 2016 is similar. Fengguang Precision and Yoshioka Precision showed an upward trend, and the net profit margin levels of the two companies in 2021H1 were 21.56% and 16.90% respectively. The net interest rate of Fenglong shares remained stable, and the net interest rate level of 2021H1 was 17.85%. The net profit margin of Wencan shares and Qijing Machinery 2021H1 is 3.61% and 5.04% respectively.
From the perspective of R&D expense rate, the overall R&D expense rate of comparable companies is stable, and the gap is relatively small. Among them, Yoshioka Precision R&D expenditure level is in the middle of comparable companies.
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6.1. Revenue Projections
6.1.1. Analysis of income situation
The company's operating income from 2018 to 2020 was 2.00, 2.08 and 260 million yuan respectively, and we predict that the company's revenue from 2021 to 2023 will be 3.28, 4.08 and 49,900 yuan, respectively, achieving a compound annual growth rate of about 25%.
Power tool parts: We expect that the corresponding revenue in 2021-2023 will be 9,011.03, 12,043.25 and 153.4310 million yuan, respectively, and the gross profit margin will be stable and rising.
Steam heaters: We expect the corresponding revenues in 2021-2023 to be 6,342.40, 7600.29 and 87.6063 million yuan, respectively, and the future gross profit margin is relatively stable.
Auto parts: We expect the corresponding revenue from 2021 to 2023 to be 11,772.02, 15,462.06 and 202.5443 million yuan, respectively, with a relatively stable gross profit margin.
6.1.2. Analysis of costs
Selling expenses: We expect the company's 2021-2023 sales expense ratios to be 1.03%/1.05%/1.10%, respectively.
Overhead: We expect the Company's 2021-2023 management expense ratio to be 3.22%/3.25%/3.11%, respectively.
R&D expenses: We expect the company's R&D expense ratios from 2021 to 2023 to be 4.19%/4.33%/4.51%, respectively.
6.1.3. Analysis of profits
We expect the company's net profit from 2021 to 2023 to be 5376, 7,170 and 89.12 million yuan, respectively, and the net profit growth rate will be 23.64%, 33.38% and 24.29% respectively.
(This article is for informational purposes only and does not represent any of our investment advice.) For usage information, see the original report. ）
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