Zhejiang Sanhua Intelligent Control Co., Ltd., referred to as Sanhua Intelligent Control, was established on September 10, 1994 and listed on the Shenzhen Stock Exchange on June 7, 2005. The stock code is 002050. It is headquartered in Shaoxing City, Zhejiang Province. The compan

.2.1.1 Refrigeration and air conditioning industry overview

The upstream of the refrigeration and air conditioning equipment industry is mainly composed of steel, aluminum and other non-ferrous metals, It consists of electronic components, refrigeration compressor , electronic expansion valve, condenser and evaporator . The midstream is mainly the assembly and manufacturing of refrigeration and air-conditioning equipment. The downstream application scenarios are mainly cold chain transportation , the power industry, and the pharmaceutical industry. and public and commercial buildings, etc.

From the perspective of representative companies in the industry chain, representative companies in the upstream of the industry chain include Baosteel Co., Ltd. , Taiyuan Stainless Steel, etc. in the steel industry, Dingsheng New Materials , Jiangxi Copper , etc. in the non-ferrous metal industry, and electronics Hengtong Group , Lixun Precision, etc. in the component industry; Highly Co., Sanhua Holdings , Zhejiang Fuyuan, etc. in the equipment parts industry; representative companies in the midstream refrigeration and air-conditioning equipment include Shuangliang Energy Saving, Kaixue Cold Chain, Hairong cold chain , Yindu shares, etc.

Judging from the supply of upstream parts and components for China's refrigeration and air-conditioning equipment, with the improvement of my country's manufacturing strength and the exploration of the refrigeration and air-conditioning equipment market, the overall development of the upstream parts and components industry for my country's refrigeration and air-conditioning equipment is improving.

Application scenarios: Refrigeration and air conditioning equipment is mechanical equipment closely related to the national economy and people's lives. It is widely used in national defense, aerospace, nuclear engineering , mechanical electronics . Chemical industry, metallurgy, electric power, transportation, environmental protection, light industry and other fields, among which the four major fields are cold chain logistics, electric power industry, pharmaceutical industry and public and commercial buildings, including refrigerated vehicles, railways refrigerated vehicles , power generation and transmission, office buildings, commercial business buildings and other subdivisions.

.2.1.2 Refrigeration and air conditioning industry market size:

In recent years, the domestic economy has grown rapidly, living standards have made a qualitative leap, the demand for refrigeration and refrigeration has become increasingly prominent, and refrigeration and air conditioning equipment has ushered in huge development opportunities. According to National Bureau of Statistics statistics, the sales revenue of my country's refrigeration and air-conditioning equipment industry above designated size showed a volatile growth trend from 2012 to 2019. In 2019, the sales revenue of my country's refrigeration and air-conditioning equipment industry above designated size was approximately 267.875 billion yuan, a year-on-year increase of 8.69% . In 2020, based on the operating conditions of industry enterprises and the national economic situation, it is preliminary estimated that the sales revenue of my country's above-scale refrigeration and air-conditioning equipment industry will increase to approximately 279.8 billion yuan.

According to industry online, HVAC and other statistical data, among the key segmentation products of refrigeration and air conditioning equipment: commercial refrigeration equipment, industrial refrigeration equipment, central air conditioners and vehicle air conditioners, the following refrigeration and air conditioning equipment market segments are calculated. Product structure: In the market structure in 2020, the central air-conditioning market accounts for the largest proportion, nearly accounting for 30% of the total industry market, and then the proportions in descending order are commercial refrigeration equipment, automotive air conditioners, and industrial refrigeration equipment.

Based on the historical growth rate of sales revenue above designated size in the industry, it is predicted that the sales revenue of my country's refrigeration and air-conditioning equipment industry above designated size will grow to 327.5 billion yuan by 2026.

.2.2.1 Automobile thermal management system industry overview

Automobile thermal management system is to temperature control and cool the car to ensure that the various parts of the car and the cockpit are in a reasonable state temperature range to achieve fuel saving, comfort, and improved cruising range. Automobile thermal management systems can be divided into comfort thermal management and power system thermal management according to their functions. Comfort thermal management is mainly the thermal management of the air conditioning system, which can be divided into two major functions: cooling and heating; the thermal management of the power system is manifested as engine cooling , in traditional fuel vehicles, while in new energy vehicles it is mainly manifested as regulation The temperature of the battery, motor, motor controller (collectively known as the "three-power system"), includes different mode selections under hot and cold control.

vehicle thermal management architecture diagram

Source: Puhua Youce

.2.2.2 Automotive Thermal Management System Industry Market Field pattern

Since the automotive thermal management system integrates knowledge accumulation from multiple disciplines such as thermal, fluid mechanics , aerodynamics, electrical and software, the production process includes forging, stamping, precision machining, brazing, assembly, helium inspection and other processes, the industry's technical barriers are high; international leading companies have strong thermal management system design and R&D capabilities because they have mastered key core components, and have strong system supporting capabilities, basically in all aspects of the automotive thermal management system are covered; while domestic manufacturers can provide a certain The ability to integrate systems is weak. It mainly provides thermal management system components such as compressors , valves, and pumps. Although it has mastered core technologies in various subdivisions, it lacks system development and supporting capabilities, so the overall There is still a certain gap in market share compared with international manufacturers.

At this stage, the new energy vehicle thermal management system market, as a segmented industry with accelerated iteration of marginal technologies and strong short-term explosiveness, is in a state where a hundred schools of thought contend and a hundred flowers bloom.Leading foreign companies can easily enter the field of new energy vehicle thermal management systems by virtue of their rich experience in the field of traditional fuel vehicle thermal management systems; for domestic manufacturers, they have more local supporting facilities and cost advantages than foreign manufacturers, and are expected to Quickly seize the market share of new energy vehicle thermal management systems. Under the general trend of standardization and modularization of heat pipe management solutions, industry concentration will continue to increase, and advantageous manufacturers will gradually stand out.

At present, the foreign companies in the industry that are mainly engaged in the production and sales of automotive thermal management system parts mainly include Denso, Hanon, Mahle, Valeo, etc., and domestic companies include Yinlun Co., Ltd. , Sanhua Intelligent Control, and Tenglong Co., Ltd. , Quanfeng Automobile, etc.

.2.2.3 China’s automotive thermal management system market size

According to data from the China Automobile Association and Everbright Securities Research Institute, affected by the epidemic and the development of new energy vehicles, the thermal management market size of China’s traditional vehicles will decline in 2020, but it will decline thereafter. Stable at around 81.5 billion yuan.

China's fuel vehicle thermal management system market size status and forecast from 2015 to 2025

Statistics: CICC Enterprises International Consulting

As an important component of new energy vehicles, the thermal management system is driven by the rapid growth of vehicle demand and the increase in bicycle value. In the future, the market size of new energy vehicle thermal management systems will usher in rapid growth, and the market space is huge. In 2019, China's new energy vehicle thermal management system market size was 11 billion yuan, and it is predicted that it will reach 25 billion yuan in 2025.

China's new energy vehicle thermal management system market size analysis from 2015 to 2025

Statistics: CICC Enterprises International Consulting

Core Competencies

1.3.1 Brand advantage

The company ranks first in the industry in total assets, total operating income, and net profit. The company is the world's largest manufacturer of refrigeration control components and the world's leading manufacturer of automotive thermal management system control components. "Sanhua" brand refrigeration intelligent control components The device has become a world-renowned brand and is a strategic partner of many global car companies and air-conditioning and refrigeration appliance manufacturers.

1.3.2 Global marketing network and production base advantages

Since the 1990s, the company has focused on exploring the international market and established overseas subsidiaries in Japan, South Korea, Singapore, the United States, Mexico, Germany and other places to build global marketing network. At the same time, overseas production bases have been established in the United States, Poland, Mexico, Vietnam, India and other places, gradually possessing global production response capabilities. In practice, it has cultivated a group of management talents who can adapt to the business expansion needs of different countries and regions.

1.3.3Technical advantages

As a national high-tech enterprise, the company has always adhered to the technical route of independent development and innovation, and has been doing so for decades. Focusing on the field of intelligent control and vigorously cultivating core technologies with independent intellectual property rights, it has obtained 2,802 domestic and foreign patent authorizations, including 1,366 invention patent authorizations.

1.3.3 Cultural advantages

Sanhua takes "the flower of management, the flower of technology, the flower of talent" as the cultural essence, adheres to the management philosophy of "people-oriented, science and technology develops the enterprise", and implements the Sanhua spirit and spirit of "keep improving and pursue excellence" With the style of "quick response and immediate action", Sanhua constantly pursues and dares to innovate, and strives to realize the ideal of Sanhua people - "Sanhua has a century-old foundation and an evergreen foundation."

.4Corporate Team

1.4.1 Executive Resume

Mr. Zhang Yabo: Born in 1974, China Europe International Business School Master of Business Administration. Graduated from Shanghai Jiao Tong University in July 1996. From May 2007 to September 2009, he served as vice president of Sanhua Holding Group Co., Ltd.; from May 2007 to present, he has served as president of Sanhua Holding Group. Co., Ltd. Director and Vice Chairman of the Board of Directors; from September 2009 to December 2012, he served as the general manager of the company. From October 2009, he served as a director of the company. has served as the chairman and chief executive officer (CEO) of the company since December 2012. .

Mr. Wang Dayong: Born in 1969, Master of Business Administration (EMBA), senior economist and engineer.He once served as the chief of the planning department, secretary to the general manager, director of the manufacturing department, director of the refrigeration valve business department, assistant to the general manager, assistant to the president, vice president and director of Sanhua Group. He served as the supervisor of the company from December 2001 to April 2006, and as the director of the company from April 2006 to May 2011; has served as the president of the company from December 2012 to the present, and currently serves as the director of Sanhua Holding Group Co., Ltd.; in 2012 He has served as director of the company since December.

Mr. Hu Kaicheng: Born in 1975, Master's degree, Tongji University Bachelor's degree, Shanghai Jiao Tong University SAIF EMBA, from August 2006 to August 2009, he served as supplier management director, purchasing director and purchasing director of the company at Zhejiang Sanhua Refrigeration Group Co., Ltd.; from September 2009 to December 2010, he worked at Sanhua Holding Group Co., Ltd. Co., Ltd.; from January 2011 to October 2014, he served as the purchasing director of the company; has served as the vice president of the company since October 2014; has served as the secretary of the board of directors of the company since January 2015.

Mr. Yu Yingkui : Born in 1974, bachelor's degree, accountant. Completed the postgraduate course in accounting at Shanghai University of Finance and Economics. From April 2001 to December 2003, he served as chief accountant of the finance department of Zhejiang Sanhua Group Co., Ltd. and Zhejiang Sanhua Refrigeration Group Co., Ltd.; from December 2003 to November 2007, he served as deputy general manager of Shenyang Durui Wheel Co., Ltd. ; From November 2007 to present, he has served as the head of the financial department of the company; has served as the financial director of the company from September 2011 to present; from January 2016 to present, he has served as vice president of the company.

The current senior managers of the company have been with the company for a long time, have grown with the company, identify with the company's operations and value system, have rich management experience, and play a decisive role in the company's development.

1.4.2 The company's equity incentive

According to the company's 2021 annual report, the company launched the first phase of the equity incentive plan in 2018. In 2020, the company launched the second phase of the restricted incentive plan again, which played a significant role in the company's core key talents. Incentive and retention function, laying a talent foundation for the company's sustainable development.

.5 Equity structure

Shares held by actual controllers: Zhang Daocai , Zhang Yabo, and Zhang Xiaobo hold a total of 30.18% of the company's shares in Intelligent Control, and the equity is relatively reasonable.

Financial statement analysis .1 Five major financial indicators .1.1 ROE

Sanhua Intelligent Control's ROE in the past five years is around 15%, which is relatively stable and excellent.

Comparison with the same industry:

According to the data in the above figure, Dunan Environment ROE fluctuates between highs and lows, with weak stability, while Highly's ROE is single digits. In comparison, Sanhua Intelligent Control's ROE advantage Prominent and strong stability.

.1.2 Net profit cash content

Sanhua Intelligent Control’s net profit cash ratio average value in the past five years is 103.35%, and the net profit quality is good.

Comparison with the same industry:

According to the data in the above figure, Dunan Environment lost 2.308 billion in net profit in 2018, and turned a profit in 2019, with a net profit of 23 million, and a net cash ratio of 2760.5%, which is not representative. Net profit will continue to suffer losses in 2020, and it will turn losses into profits in 2021, and the stability of net profit is weak. The average net cash ratio of Highly Shares in the past five years is 209.45. The cash content of net profit is high, followed by Sanhua Intelligent Control. The stability of Dunan Environment's net cash ratio needs to be strengthened.

.1.3 Gross profit margin

Sanhua Intelligent Control's gross profit margin has fluctuated between 25% and 32% in the past five years. There has been a downward trend in the past two years and requires continued attention.

Comparison with the same industry:

According to the data in the above figure, the gross profit margins of Dunan Environment and Highly Holdings in the past five years have both been less than 20%. In comparison, Sanhua Intelligent Control's gross profit margins are higher.

.1.4 Asset-liability ratio

(1) Asset-liability ratio

Sanhua Intelligent Control’s asset-liability ratio has been on the rise in the past five years, reaching 52.36% in 2021. The reason is that 2021 issued convertible bonds of billion, which increased interest-bearing liabilities.

(2) The difference between quasi-monetary funds minus interest-bearing liabilities

Sanhua Intelligent Control’s quasi-monetary funds minus interest-bearing liabilities has been positive in the past three years, and there is no debt repayment risk.

Comparison with the same industry:

According to the data above, the debt ratio of Dunan Environment and Highly Holdings exceeds 60%, and the possibility of debt crisis is greater. In comparison, Sanhua Intelligent Control's debt ratio is small A lot, basically no debt repayment risk.

.1.5 Dividend payout ratio

Sanhua Intelligent Control's dividend payout ratio in the past five years has been between 25% and 61%, proving that the company is more generous to investors and has strong dividend sustainability.

.2 Other financial indicators .2.1 Total assets

The compound growth rate of Sanhua Intelligent Control’s total assets in the past five years is 17.6%, and the company is growing.

Comparison with the same industry:

The total asset growth rate of Dun'an Environment and Highly Co., Ltd. is not as good as that of Sanhua Intelligent Control. The total asset growth rate of Highly Co., Ltd. is more stable than Dunan Environment.

.2.2 "Payables in advance" and "receivables in advance"

Sanhua Intelligent Control's payables in the past five years has a negative balance in payables and receivables in advance. The funds are occupied by upstream and downstream companies for free, and the company's competitiveness needs to be improved.

Comparison with the same industry:

Dun'an Environment and Highly Co., Ltd. In the past five years, the balance of payables and prepayments has been positive. Compared with this, Sanhua Intelligent Control's competitiveness is relatively weak and requires continued attention.

.2.3 Accounts receivable and contract assets

The ratio of accounts receivable + contract assets to total assets of Sanhua Intelligent Control in the past five years has fluctuated in the range of 13.21%-15.22%. The proportion is a bit high and requires continued attention. .

Comparison with the same industry:

Dun'an Environment The ratio of accounts receivable + contract assets to total assets in the past five years has shown a downward trend, and product competitiveness is strengthening, while Hai Li shares 's accounts receivable in the past three years +The ratio of contract assets to total assets is greater than 18.95%, and product competitiveness is weak. In contrast, Sanhua Intelligent Control's product competitiveness ranks second among the three companies.

.2.4 Period expense rate

Sanhua Intelligent Control’s expense rate during the past five years has been around 15%, while the proportion of expense rate to gross profit margin has fluctuated around 50%, and cost control capabilities need to be improved.

Comparison with the same industry:

Dun'an Environment and Highly Holdings The expense ratio accounted for more than 60% of gross profit margin in the past five years, and the cost control ability is relatively weak. In comparison, Sanhua Intelligent Control's cost control ability is better .

.2.5 Main operating profit

Sanhua Intelligent Control’s main operating profit margin has fluctuated in the range of 11.67%-14.88% in the past five years. The low main operating profit profit rate is mainly due to the increase in materials, transportation, labor, etc.

Comparison with the same industry:

According to the data in the above figure, the main profit margins of Dunan Environment and Highly are both less than 10%. In comparison, the main profit margins of Sanhua Intelligent Control are better.

.3 Financial report summary .3.1 Advantages

Sanhua Intelligent Control is an asset-light company focusing on its main business. It has rapid growth in total assets, stable operating income, sufficient monetary funds, basically no debt repayment risk, and relatively high hematopoietic capacity. Strong, the gross profit margin is relatively high in the same industry, the dividend sustainability is strong, and the company is growing.

.3.2 Disadvantages

The company has a large proportion of accounts receivable, and its cost control capabilities need to be improved. High main operating costs lead to low main operating profit margins, which requires continued attention.

.3.3 Interpretation of the first quarter report

Sanhua Intelligent Control In the first quarter, the company achieved operating income of 4.8 billion yuan, a year-on-year increase of 40.94%. The net profit attributable to the parent company was 453 million, a year-on-year increase of 25.81%. The performance was in line with expectations.

Valuation: .1 Reasonable P/E ratio:

Check the historical average P/E ratio of Sanhua Intelligent Control in the past 5 years on Yiniu.com at 37.94, while the current P/E ratio of 64.3 on Cheese Fortune.com is higher than 99.44% of the time in the past 10 years, higher than the industry Average P/E ratio.

Based on Yiniu.com and Cheese Fortune and industry average price-to-earnings ratio data, as well as the company's fundamentals and core competitiveness, Sanhua Intelligent Control has been given a reasonable price-to-earnings ratio of 25 times.

.2 Net profit growth rate

Based on the company’s net profit attributable to the parent company in 2017 of 1.236 billion and the net profit attributable to the parent company in 2021 to 1.684 billion, the compound growth rate of the company’s net profit in the past five years is calculated to be 8.04%.

Through Luobo Investment Research, we inquired about the institutions’ predicted net profit growth rates in the next three years: 35.80%, 27.02%, and 26.13% respectively. The average growth rate is 29.65%. The forecast data for the next three years given by Flush stock are respectively 33.29%, 29.60%, and 24.43%, with an average growth rate of 29.11%.

Based on the above data, the company’s future net profit growth rate is 8.04%

.3 Valuation price

Summary .1 Advantages

.1.1 National industrial policies encourage industry development

In recent years, in order to support the automobile industry and the auto parts industry, various national ministries and commissions have successively issued a series of industrial policies to encourage development, which is conducive to promoting the development of the industry.

.1.2 The development of energy conservation and emission reduction and lightweight and new energy vehicles has given rise to broad market prospects

With the proposal of low-carbon economy and the call for energy conservation and emission reduction, new energy vehicles and energy conservation and emission reduction have become the main theme of the development of the automobile industry. First, energy-saving technology, new energy technology, and lightweight technology are developing rapidly, which in turn has led to an increase in market demand for related automobiles and parts products. The newly added three-electric system of new energy vehicles puts forward higher requirements for thermal management. The value of a thermal management system is significantly higher than that of traditional fuel vehicles, and the market prospect of automotive thermal management systems is broader.

.1.3 Global procurement of auto parts brings good opportunities

Under the trend of global economic integration, market competition is becoming increasingly fierce. The world's major vehicle manufacturers and auto parts companies are focusing on their core businesses and advantageous businesses. , in order to reduce costs and gradually reduce the self-made rate of auto parts, global procurement of auto parts has become a general trend in the development of the automotive industry.

.2 Risks

.2.1 The macroeconomic downturn and epidemic control have led to sluggish industry demand

If the macroeconomic continues to decline more than expected in 2022, residents' income will be affected, resulting in sluggish industry demand and sales pressure. Unexpected changes in the epidemic will directly affect the production and sales of the global automobile industry.

.2.2 Raw material prices and exchange rate fluctuation risks

The company's accounts receivable account for a large proportion, and its cost control capabilities need to be improved. If raw material prices continue to rise sharply, the company's profitability will be further put under pressure.

Risk warning: The views mentioned in this article only represent personal opinions, and the subject matter involved is not recommended. Buying and selling based on this is at your own risk. Copyright belongs to the author. For commercial reprinting, please contact the author for authorization. For non-commercial reprinting, please indicate the source.