(Report producer/author: Guotai Junan Securities, Xu Qiaowei, Zeng Dapeng)
. Tools: Consumables have wide applications and distinctive industry barriers 1.1. Tools are the teeth of modern industry and are indispensable in mechanical processing
Tools are an indispensable part of mechanical processing. Machine tools are machines that manufacture machines and play an important role in modern construction. With the advent of the automation era, CNC machine tools that use automation control technology, comprehensive modern precision transmission control technology and precision manufacturing technology were born, and high-speed, high-precision, high-efficiency and high-quality product manufacturing and production have been achieved, making machine tools truly the "mother of work" in the mechanical field. Tools are an important part of CNC machine tools and are the core components for the machine tools to realize cutting functions. They have the characteristics of "high precision, high technology and high performance". Tools and machine tools are two relatively independent but complementary systems that jointly promote the development of modern manufacturing. The tool consists of a handle, a rod (disk) and a blade. The unit price of tool holder and tool rod (disk) ranges from 100 to 1,000 yuan; while the unit price of blades is 1/10 of them, which is rotated every few hours on average, and the demand is large. It is a consumable product required by CNC machine tools in various mechanical processing processes. It is widely used in metal processing in automobiles, rail transit, aerospace, precision molds, energy equipment, engineering machinery, general machinery, , petrochemicals and other fields.
1.2. Hardness and toughness are both hardness and toughness, cemented carbide is the mainstream material
Currently, the main tool materials include cemented carbide, tool steel , ceramics and superhard material (PCD, CBN). The quality of tools directly determines the production level of the machinery manufacturing industry, and is also the most important factor in manufacturing product quality and improving production efficiency. Efficient and advanced tools can improve product quality and cutting efficiency and reduce production costs by improving machining accuracy and workpiece surface quality. Tool materials are one of the important factors that determine tool performance. Currently, the main tool materials include carbide, tool steel, ceramics and superhard materials (PCD, CBN). With the development of industrial technology, various tool materials have developed, cooperated with each other and competed with each other, providing solutions for modern cutting processing through combined applications. The four different materials have their own characteristics:
(1) Tool steel: relatively poor hardness, wear resistance and heat resistance, but high bending strength, cheap and easy to weld. It has good sharpening performance and is widely used in forming tools for medium and low speed cutting (high-performance high-speed steel cutting speed can reach 50-100m/min), and high-speed cutting is not suitable. It is commonly used in drill bits, taps, saw blades, hobs, , tooth insertion knives, broaches and other tools, and is especially suitable for the manufacture of impact-resistant metal cutting tools.
(2) Cemented carbide: has a series of excellent properties such as high hardness (86-93HRA), wear resistance, good strength and toughness, heat resistance, corrosion resistance, especially its high hardness and wear resistance. Even at 500℃, it remains basically unchanged and has a high hardness at 1000℃. The strength of cemented carbide is lower than that of high-speed steel , and is not suitable for working conditions with strong impact. It is widely used as tool materials, such as turning tool , milling tool , planer , drill bits, boring tools, etc., and is used to cut cast iron, non-ferrous metals, plastics, chemical fibers, graphite, glass, stone and ordinary steel. It can also be used to cut difficult-to-process materials such as heat-resistant steel, stainless steel, high manganese steel, tool steel, etc.
(3) Ceramics: high hardness, wear resistance, heat resistance, chemical stability, low friction coefficient, low strength and toughness, and low thermal conductivity. It is mainly suitable for semi-finishing or finishing of continuous cutting of steel, cast iron, and high-hard materials (quenched steel).
(4) Superhard materials are divided into artificial diamond (PCD) and cubic boron nitride (CBN): artificial diamond (PCD): the highest hardness and wear resistance, small friction coefficient, good thermal conductivity but not temperature resistant (heat resistance of 800 degrees), and the cutting speed can reach 2500-5000m/min, but it is expensive, and processing and welding are very difficult. It is mainly used for high-precision, low-roughness cutting of non-ferrous metals, as well as the finishing of non-metallic materials, and is not suitable for cutting ferrous metals. cubic boron nitride (CBN): high hardness (second only to diamond ) and high heat resistance (heat resistance 1400 degrees), stable chemical properties, good thermal conductivity, low friction coefficient, slightly lower flexural strength and toughness than cemented carbide. Cubic boron nitride is mainly used for semi-finishing and finishing of difficult-to-process materials such as high-temperature alloys, hardened steels, and cold hard cast iron, especially high-speed cutting of ferrous metals.
carbide tool has strong comprehensive performance, both hardness and toughness. Cemented carbide has high strength and wear resistance, and is an alloy material composed of refractory metal carbides as the main component and metals acting as bonding phase. Compared with tool steel, cemented carbide has higher hardness, wear resistance and red hardness; compared with ceramics and superhard materials, cemented carbide has higher toughness. Since cemented carbide has good comprehensive performance, it is widely used in the processing of steel (P), stainless steel (M), cast iron (K), non-ferrous metal (N), heat-resistant steel (S) and hardened steel (H) materials. With the optimization of important process flows of tool production such as mixing material equipment, molding and sintering, grinding and coating, hard alloy is widely used in tool and blade production. According to statistics from China Machine Tool Industry Association , the main types of cemented carbide tool products include cemented carbide insert , milling tools, turning tools, hole processing tools , etc., among which the proportion used in the production of inserts is the highest, close to 50%.
1.3. The industry is clear upstream and downstream, and cemented carbide tools are widely used
carbide tools upstream enterprises are mainly enterprises that produce tungsten carbide powder and cobalt powder . Tungsten has the characteristics of high hardness and high melting point. It is widely used in the machinery manufacturing industry and is a strategic mineral resource in China. my country's tungsten resources account for about 60% of the world's reserves, and its production and sales volume ranks first in the world. There are many domestic tungsten carbide production and supply is sufficient. Cobalt is a small metal resource. Because of its high temperature resistance and corrosion resistance, it is widely used in the machinery manufacturing industry. Although China's cobalt resources only account for about 1% of the world's reserves, the cobalt smelting process is at the world's leading level, and the investment of domestic enterprises in major cobalt ore resource countries has greatly improved the cobalt resource guarantee capacity.
downstream demand is strong, and consumable properties and scattered downstream applications are smoothing the industry cycle. The downstream of the tool industry is mainly manufacturing. According to the consumption scale of my country's cutting tool according to the manufacturing sector, the demand for tools in the automobile, motorcycle, machine tool, aerospace, general machinery, molds and engineering machinery industries is particularly obvious, accounting for 95.4%, and it also has certain applications in high-end fields such as rail transit, energy equipment and new energy. Given the promotion of national economic policies on the development of prosperous industries such as new energy and the government attaches great importance to industries such as aerospace, the rapid development of these industries will inevitably drive the growth of demand for high-end cutting tools.
Purchase tax discount exceeds expectations and the upward trend of the car economy is certain. According to the 4th cutting tool user survey and analysis report, automobiles, motorcycles/machine tool tools/general machinery are the top three downstream applications of machine tool tools, accounting for 20.9%/18.1%/15.1% respectively. The engines that use tools on cars are mostly made up of five major components: cylinder block, crankshaft , connecting rod, camshaft , and cylinder head . In April 2022, data showed that 1.181 million vehicles/-47.6% of automobile sales were significantly dragged down by the repeated epidemic, but the investment side's cumulative year-on-year +10.4% remained at a high level, indicating that enterprises as the main body of the production company have a high probability of rebounding demand. The new round of passenger car purchase tax preferential policies with a reduction of 60 billion yuan exceeded expectations. Some cities and regions with conditions have successively issued promotional fee policies. The upward trend of the automobile economy is certain, and the development of new energy vehicle also drives upstream parts demand. At the same time, from the export delivery value of mold manufacturing, the world's mold manufacturing industry orders in 2022 tend to be tilted towards my country, and we are optimistic about the growth of high-end precision molds. In addition, aerospace and general machinery will also have highlights in 2022. Construction machinery is expected to grow for a limited year. Order conditions in April-May 2022 show that the market situation is still unclear, and it will take some time to stabilize consumer applications such as 3C.
1.4. Technology intensive and capital intensive, the tool industry has high barriers
1.4.1. Tool production involves four core technologies, and the industry has high technical barriers
Carbide tool industry is a technology intensive industry with complex production processes and high production process requirements. The production process of cemented carbide tool includes multiple processes such as mold process, alloy process, deep processing process and coating process. Each process consists of multiple different links. Its manufacturing process is long, the process is complex, and there are many key quality control points, which is difficult to control, so the industry's technical threshold is relatively high.
cemented carbide tool production involves four core technical fields, namely matrix material, groove structure, precision molding and surface coating: (1) Matrix material: The hardness and toughness of cemented carbide are determined by the adjustment and balance of composition and structure. Developing more targeted matrix materials is a key and difficult point in the industry's R&D. The main technical links include matrix brand development, carbon content control and grain size control. (2) Groove-type structure: It is the direct stress and main wear part of cutting. A reasonable groove-type structure can reduce cutting resistance, enhance chip breaking ability, and solve the problem of chip breaking cleaning of metal cutting to meet the processing needs of efficient cutting. (3) Precision molding: affects the pressing, firing and shrinkage and deformation during deep processing during molding, thereby affecting the consistency and stability of the product, and improving product accuracy. The main technical links include mold preparation, mix preparation, pressing and molding control and sintering and molding control. (4) Surface coating: The surface coating plays a protective and barrier role. Excellent surface coating can extend the service life of the blade by 20%-30%. The main technical links include PVD coating development and CVD coating development. The improvement of
core technology will help improve the cutting performance of cemented carbide CNC inserts, such as machining accuracy, processing efficiency and service life. Through the development of matrix grades, groove structures, molded structures and coating materials that meet the diversified needs of CNC blades through core technologies in four major fields, the preparation process is accurately controlled, and the corresponding preparation process parameters or control methods are formed.
product terminals are widely used, and non-standard demands increase industry technical barriers. Tools are widely used downstream, covering many industries such as molds, automobiles, machinery, rail transit, aerospace, etc. Product terminals cover multiple sub-sectors of the manufacturing industry. The complex downstream scenarios and environments have led to a large number of non-standardized needs from customers, and have put forward diversified requirements for tool technical parameters. Tool manufacturers need to redesign and produce products according to the needs put forward by customers, making the already very complex production process even more complicated. The large amount of non-standardization demand is undoubtedly a test of the manufacturer's design and production technology level, which further improves the industry's technical barriers.
1.4.2. The tool industry is capital-intensive and has a long return cycle
The carbide tool industry is a capital-intensive industry, with expensive production equipment and a long return cycle. Taking Huarui Precision as an example, Huarui Precision's prospectus shows that the total original value of carbide cutting tools has reached 236 million yuan and the total net value has reached 177 million yuan. Domestic equipment is mainly used in material making and sintering processes, while the equipment used in mold, pressing, grinding and coating processes is dependent on imports, resulting in high value of the company's production equipment. According to the 2022 targeted share issuance plan of Oukeyi , an annual output of 1,000 tons of high-performance bars, 3 million integral carbide tools, 200,000 sets of CNC tools, 5 million cermet blades and 10 tons of cermet sawtooth will require an investment of 750 million yuan. The industry investment and construction cycle is relatively long. According to the company's announcement, the investment and construction cycle of Huarui Precision CNC tool digital production line construction project is 2 years, and the investment and construction cycle of Oukeyi CNC tool industrial park project is 1.5 years.
. Industry: The tool market is vast, and the three major factors are moving in medium- and long-term growth 2.1. The global tool market size exceeds 240 billion yuan, and the Chinese market size exceeds 40 billion
The global cutting tool market size is on the rise, with the market size exceeding 240 billion yuan.According to QYResearch data, the global cutting tool market size reached US$33.1 billion in 2016, and the global cutting tool market size reached US$37 billion in 2020, with a compound growth rate of 2.82% from 2016 to 2020. The market size is expected to reach US$39 billion in 2022.
Handling market in my country is showing a volatile upward trend, with a market size of more than 40 billion yuan. The market consumption of cutting tools in my country is closely related to the level of development and structural adjustment of my country's manufacturing industry. Affected by the slowdown in domestic investment growth and the adjustment of demand structure, the tool market size was mainly concentrated in the range of 31.2 billion yuan to 34.5 billion yuan from 2011 to 2016. With the implementation of the 13th Five-Year Plan and the continuous deepening of the domestic supply-side structural reform, the market size of the cutting tool industry reached 42.1 billion yuan in 2018, an increase of 30.95% compared with 2016. In 2019, affected by Sino-US trade frictions and downward trends in downstream industries such as automobiles, my country's cutting tool consumption fell to 39.3 billion yuan; in 2021, the market size reached 47.7 billion yuan. With the development and recovery of my country's manufacturing industry, the scale of my country's tool market is expected to continue to grow.
From the perspective of metal cutting methods, metal cutting mainly includes turning, milling, drilling and other process methods: (1) Turning refers to the cutting method in which the workpiece rotates during processing and the tool performs straight or curved feeding movement in the plane. Usually only one cutting edge participates in cutting, and the shape is relatively regular, and it is mainly used in general machinery, automobiles, rail transit, precision bearings, general machinery, high-end bathrooms, petrochemicals and other fields. (2) Milling refers to the cutting method in which the tool rotates and the workpiece is fixed or moved during processing. Usually, multiple cutting edges participate in cutting at the same time. The fluctuation of the size consistency of the insert has a great impact on service life, and is mainly used in fields such as precision molds and energy equipment. (3) Drilling refers to the cutting method in which the tool and workpiece move relative to rotate during processing and relative to feed move along the axial direction of the tool. It is mainly used in engineering machinery and new energy fields. The three processes of tools account for a high proportion of turning and milling.
It is expected that the overall growth rate of machine tool tools will slow down to +3.5% in 2022, and cemented carbides will have toughness +4.8%. In 2022Q1, domestic tools increased by 3%-5% year-on-year. In April 2022, demand in Zhejiang and Jiangsu fell by about 15% year-on-year. Shanghai's epidemic control has become more stringent, and shipments are relatively small. Based on the current on-hand order situation, MIR predicts that my country's metal processing machine tools will overall +2.9%/-4.5% from 2022 to 2023, and will gradually rebound thereafter, corresponding to the growth rate of upstream tools in 2022. Among them, +4.8% of cemented carbide has toughness.
2.2. Long-term driving factor 1: CNC rate increases
CNC machine tools trend, market demand and industrial policies accelerate penetration. With the development and progress of my country's manufacturing industry, the product specifications on the market are constantly enriching, and the market demand for high-precision and efficient cutting is becoming increasingly strong. " Made in China 2025" proposes to transform from a manufacturing power to a manufacturing power, and ultimately achieve the goal of a manufacturing power. Machine tools are the mother of industry and are a powerful tool to implement the strategy of a manufacturing power. Therefore, high-end CNC machine tools are listed as one of the key areas for vigorously promoting breakthrough development. The country and relevant departments have successively formulated a series of industrial policies to support the development of CNC machine tools.
CNC machine tool market penetration rate is expected to promote the expansion of the tool market. In the consumption structure of tool products in my country, traditional welding tools account for a large proportion. With the complexity of the structure of processing products and the continuous improvement of the accuracy requirements of processing , my country's machine tool equipment is gradually transitioning from traditional ordinary machine tools to CNC machine tools. The CNC rate of my country's new metal cutting machine tools increased from 28.83% in 2013 to 42.9% in 2020. Compared with the CNC rate of machine tools of the international manufacturing powerhouse with a strong international manufacturing industry, there is a lot of room for improvement in the degree of CNC of metal cutting machine tools in my country. As a consumable component of CNC metal cutting machine tools, CNC tools will drive the consumption demand of CNC tools with the upgrading of industrial structure, whether it is the equipment needs of existing machine tools or the incremental demand for new machine tools every year.
2.3. Long-term driving factor 2: The proportion of cemented carbide tools increases
The proportion of cemented carbide tools increases year by year, and has gradually become the mainstream of the market. Changes in tool material structure reflect the development level of my country's manufacturing industry. With the continuous upgrading of my country's manufacturing industry, the proportion of output value of cemented carbide tools will gradually increase. The output value of cemented carbide tools in my country increased from 39% in 2015 to 47% in 2019, accounting for more than tool steel tools for the first time.
2.4. Medium-term driving factors: machine tool industry prosperity has entered the upward channel, tool consumption has rebounded
2022H2 Machine tools may enter the upward channel, and tool industry prosperity is expected to rebound. Machine tools are known as the "mother of industry" and represent the overall level of the country's manufacturing industry. By sorting out the historical order and output data over a long period of time, we found that the prosperity cycle of machine tools is relatively significant, with an average of about 3.5-4 years, and there are certain differences in the situation in different countries. Japan has a different cycle, and is currently at the end of a small cycle. Since the completion of industrialization in 2012, China has essentially experienced a long period of fluctuation and downward trend, and the cycle duration has increased. The impact of the epidemic will only make the cycle late but not absent. Based on this calculation, the start of the 2022H2 machine tool may enter the upward channel. At that time, the domestic manufacturing industry may once again show a strong supply and demand. As the "tite" of industrial machine tools, tools are an important part of high-end CNC machine tools, and have a direct impact on improving the performance of machine tools in terms of precision, high speed and efficiency. The prosperity of the machine tool industry is expected to randomly enter the upward channel and improve.
my country's tool consumption accounts for the proportion of machine tool consumption is on the rise, and there is still a lot of room for tool consumption. The performance of the tool largely determines the quality and production efficiency of the machine. Manufacturing powers such as Germany, the United States and Japan pay attention to the coordination between modern CNC machine tools and efficient tools, and balance the development of . The annual tool consumption scale is about 50% of machine tool consumption. In 2012, the proportion of tool consumption in my country's market accounted for only 14.13% of machine tool consumption, and reached 25.26% in 2019, which was a significant upward trend, but it was still far lower than the level of about 50% in developed countries. As domestic end users' production concept gradually shifts from "relying on cheap labor" to "improving processing means to improve efficiency" and the transformation and upgrading of the machine tool market, there is still a lot of room for improvement in the scale of tool consumption in my country.
. Competitive pattern: Domestic substitution continues to accelerate, and production capacity expansion is not afraid of overcapacity
3.1. The market competition pattern is pyramid-shaped, with the head still concentrated in the process
International tool industry competition pattern is divided into three camps: European and American tool companies (first camp), Korean tool companies (second camp) and domestic tool companies (third camp): The first camp is European and American tool companies represented by Sandvik and Iska. European and American tool companies are positioned to provide customers with complete tool solutions and always dominate the field of high-end customized tooling. The second camp is Japanese and Korean tool companies represented by Mitsubishi Materials and Chloe. Japanese and Korean tool companies are positioned to provide customers with versatility, stability and cost-effective products, and have won the favor of many manufacturers in the field of non-customized tools in the high-end manufacturing industry. The third camp is Chinese tool companies represented by Zhuzhou Diamond and Oukeyi. There are many tool companies in China and the gap in competitive strength is large. It has won more mid- and low-end market share mainly through the differentiated product strategy and price advantages.
European and American camps and Japanese and Korean camps have obvious advantages, and the domestic camps are facing challenges: European and American camps: European and American camps have a long history. Sandvik was founded in 1862 and Kenna Metal was founded in 1943. The European and American camps have high brand awareness and obvious technological leadership. They occupy the main market share in the high-end field, but the price is too high. Japanese and Korean camp: The development history of the Japanese and Korean camps is second only to that of the European and American camps. Mitsubishi Materials was founded in 1875 and Kyocera in Japan was founded in 1959. The Japanese and Korean camp has a high brand awareness and accounts for the largest proportion of imported knives in my country. It has the advantages of good versatility, high stability and moderate price.Domestic camp: The start time of the domestic camp development lags significantly. Xiamen Jinlu was founded in 1989 and Zhuzhou Diamond was founded in 2002. The domestic camp has a low technical level, and is mainly based on mid- and low-end products, with a price advantage. However, with the development of my country's manufacturing industry, the technology of leading domestic tool companies has been continuously improving, and the performance of some mid-range products has reached the international level, and there is sufficient future development potential.
The domestic market competition pattern is relatively scattered, and the head is still concentrated. MIR statistics show that the domestic cemented carbide tool market CR10 was only 21.4% in 2020, and the domestic cemented carbide tool market CR10 was 24.4% in 2021, an increase of 3pct compared with 2020. It can be seen that the domestic market concentration is low, the competitive landscape is relatively scattered, and the import dependence is high. Sandvik occupies the highest share in the domestic market, and domestic manufacturers only have three seats in the top 10 market share, mainly seizing mid- and low-end market share through differentiated product strategies and price advantages. Except for Zhuzhou Diamond, other domestic companies have a market share of less than 1%. (Report source: Future Think Tank)
3.2. Domestic substitution is accelerating, and comprehensive resolution capabilities are becoming increasingly important
In terms of product material performance, domestic tools have already achieved comparable performance to Japanese and Korean tools, and some products have similar performance to European and American tools. The performance indicators of OP1215 for stainless steel processing are comparable to those of Mitsubishi products of Japan. Compared with Japanese and Korean tools, Huarui Precision PVD coated blades are comparable in terms of matrix hardness and coating hardness, and the membrane-based bonding force is slightly lower; the performance of CVD coated blades is comparable in all aspects to that of Japanese and Korean, European and American tools.
Domestic tools are mainly different from imported tools in terms of stability, accuracy, service life, etc. Taking Huarui Precision as an example, in terms of stability, the fluctuation amplitude of its turning insert is 3 pieces, Mitsubishi has 2 pieces, the fluctuation amplitude of its milling insert is 1M, and the TGK has 0.5M; in terms of accuracy, its surface roughness is 0.25-0.3mm, and Mitsubishi has 0.23-0.25mm; in terms of service life, its insert wear value is very close to that of Mitsubishi and TGK.
cost-effectiveness advantages are highlighted, and the epidemic has accelerated import substitution. Under the condition that the key performance is comparable to that of Japanese and Korean tools, the average product price is only 40% of that of Japanese and Korean. The cost-effectiveness advantage of domestic tools is more prominent. The new crown epidemic has further accelerated the speed of domestic substitution. In addition to the product quality itself, the most difficult thing for domestic manufacturers to overcome in the process of domestic substitution is the stickiness between downstream manufacturers and the original European and American camps and the Japanese and Korean camps; but in the context of the epidemic, trade imports are more difficult, and customers pay more attention to the guarantee of supply. Domestic manufacturers such as Oukeyi and Huarui Precision have expanded production one after another, and have the ability to ensure supply, and downstream manufacturers are accelerating their turn to domestic camp manufacturers.
stock resonates with incremental volume, and the medium- and long-term replacement space bonus of domestic substitution is 40 billion. Objectively, domestic equipment matches domestic tools and tools are determined. The domesticization process at the equipment side will conduct components, and there are relatively clear domestic substitution guidelines in areas with strong strategic significance such as aerospace. The domestic substitution of tools is not limited to the existing import amount of more than 10 billion yuan, but also exists in the incremental space brought about by the yearly expansion of mid-to-high-end tools. The space is vast under the resonance of stock and incremental volume. Calculation shows that the domestic substitution space for tools in the short term (by 2025) is 31.4 billion, and the medium- and long term (by 2030) is 39.3 billion. We make the following key assumptions: (1) The reference MIR forecast for the domestic tool market growth in 2022-2023 will maintain a 5% growth rate every year from 2023 to 2025, and the growth will further stabilize after 2025, converging at 3%; (2) The penetration rate of domestic mid-to-high-end tool has steadily increased, from 50% in 2020 (about 30% in finishing fields such as automobiles, aerospace, etc., and higher than 70% in rough processing fields such as molds) to 60% in 2030; (3) The market share of domestic brands in the mid-to-high-end field has steadily increased, but the growth rate has declined slightly, from 52% in 2020 to 74% in 2030.
3.3. Demand growth is stable, and overcapacity is safe
3.3.1. Domestic manufacturers The new CNC blade production capacity in 2022-2023 is expected to reach 845 and 608 million yuan
Domestic manufacturers are scrambling to expand production, and the four major manufacturers have added 69 million and 60 million pieces in 2022 and 2023.my country's main cemented carbide blade manufacturers include Zhongtungsten High-Tech (Zhuzhou Diamond, Self-hardening Company), Xiamen Tungsten (Xiamen Jinlu), Oukeyi, and Huarui Precision. The four companies' expansion plans are as follows:
(1) Zhongtungsten High-Tech: The company's main companies that produce CNC blades include Zhuzhou Diamond and Self-hardening Company. According to the minutes of public investor research, the annual output of Zhuzhou Diamond CNC blades exceeded 100 million pieces in 2021, and the total output of self-hardening companies reached 109 million pieces in 2021. In terms of production expansion plan, the Zhuzhujiu Company's 2020 private placement project has expanded the company's annual production capacity by 20 million pieces to 80 million pieces. In 2022, the cutting tool technical transformation project is launched, and it plans to add 10 million CNC blade production capacity. The self-hardening company plans to expand and renovate the CNC blade production line, and the production capacity is expected to reach 20 million pieces after reaching production in 2022. Considering that Zhuzhou Diamond's actual production capacity has exceeded 100 million pieces in 2021, assuming that the actual production capacity will further expand to 110 million pieces and 120 million pieces from 2022 to 2023, the annual production capacity of the self-hardening company will be 20 million pieces and 30 million pieces respectively from 2022 to 2023. Total, it is assumed that the CNC blade production capacity of Zhongtungsten Hi-Tech will reach 130 million and 150 million respectively from 2022 to 2023.
(2) Xiamen Tungsten Industry : The company's main company that produces CNC blades is Xiamen Jinlu. From 2020 to 2021, the company's CNC blade production was approximately 32.85 and 38.17 million pieces. According to the minutes of public investor research, the company currently has a production capacity of about 50 million pieces per year. After the expansion project reaches full production by the end of the year, the production capacity of CNC blades is expected to reach 60 million pieces per year. Therefore, suppose that Xiamen Tungsten Industry's CNC blade production capacity will reach 60 million and 60 million pieces in 2022-2023 respectively.
(3) Ou Keyi: According to the company's annual report, the company's CNC blade production from 2020 to 2021 was 55.49 and 80.97 million pieces, respectively. Assuming that the annual production capacity from 2021 to 2022 is 56 million pieces and 81 million pieces, respectively. According to publicly disclosed data, the company's IPO funding project of 40 million high-end CNC blades has entered the debugging stage and will be gradually put into production in the first half of 2022. Assume that the company's CNC blade production capacity will be 100 million and 120 million respectively from 2022 to 2023.
(4) Huarui Precision: According to the company's annual report and prospectus, the company's CNC blade production from 2020 to 2021 was 57.97 million pieces and 79.59 million pieces respectively. Assuming the production capacity is 58 million pieces/year and 80 million pieces/year respectively. In terms of production expansion plan, combined with the progress of the company's IPO fundraising and investment projects and the increase in the new production capacity of the existing production lines, assuming that the company's annual production capacity will be 100 million and 120 million respectively from 2022 to 2023.
3.3.2. Under the pessimistic hypothesis scenario, it is estimated that the incremental demand for domestic CNC blades from 2022 to 2023 will be 890 million yuan, 690 million yuan
The main calculation hypothesis on the demand side is as follows:
(1) According to statistics from the China Machine Tools Industry Association, the total consumption scale of my country's tool market in 2021 will be approximately 47.7 billion yuan. Affected by the epidemic, based on the current in-hand order situation, MIR predicts that my country's metal processing machine tools will overall +2.9%/-4.5% from 2022 to 2023, and will gradually rebound thereafter, corresponding to the growth rate of upstream tools in 2022. Based on this, it is assumed that the domestic tool market size will increase by 3.5% year-on-year in 2022. Under pessimistic, neutral and optimistic conditions, the expected year-on-year growth rates in 2022/2023 will be 2.5%/1%, 3%/3%, and 3.5%/5% respectively.
(2) According to the "Fourth Cutting Tool User Survey Analysis Report", my country's consumption of cemented carbide reached 53% in 2018, which still has room for improvement compared with 63% of the world and 70% of the consumption of cemented carbides in Europe, America and Japan. Therefore, assuming pessimistic, neutral and optimistic conditions, the proportion of domestic carbide tool consumption in 2022 and 2023 will be 57% and 58% respectively.
(3) According to the "Market Structure and Forecast of my country's Cemented Carbide Tools", the statistics from the Machine Tools Industry Association can be seen that among the 11 billion imported tools in 2010, except for 1 billion high-performance high-speed steel tool , it is mainly cemented carbide tools. Assume that the proportion of hard alloy tools in imported tools remains at 95%.
(4) According to statistics from the China Machine Tool Industry Association, the scale of imported tools in my country in 2021 was 13.8 billion yuan, and indirectly calculated that the domestic production rate of cemented carbide tools was 50.92%. Assuming that under pessimistic, neutral and optimistic conditions, the domestic production rate of cemented carbide tools in 2022/2023 will be 52%/53%, 52.5%/54%, and 53%/55%, respectively.
3.3.3. There is no risk of overcapacity before 2023
Overall, before 2023, there will be no overcapacity in the domestic cemented carbide tool market. Under the three assumptions of pessimism, neutrality and optimism in 2022 and 2023, the incremental demand for domestic cemented carbide tools is RMB 890 million, RMB 1.1 million, RMB 1.15 million, and RMB 1.31 million/1.62 billion, respectively. Considering that the production expansion scale of domestic manufacturers on the supply side in 2022 and 2023 was 845 million yuan and 608 million yuan, even under the pessimistic assumption, the production increase scale of domestic manufacturers of cemented carbide CNC blades is still slightly smaller than the demand increase, and under the neutral and optimistic assumptions, there will be a clear supply shortage.
. Future development direction: high-end + globalization + industrial chain integration 4.1. High-end: Strengthen the supply capacity of comprehensive solutions to ensure future core competitiveness
Domestic tools extend to the high-end market, and the market share of imported tools has declined significantly. In recent years, domestic tool companies have continuously introduced, digested and absorbed foreign advanced technologies, and their research results and development and production capacity have been greatly improved. Domestic tools have extended to the high-end market. With the advantages of product cost-effectiveness, they have gradually realized the import substitution of high-end imported tool products, accelerating the domestic production of CNC tools. According to statistics from the China Machine Tool Industry Association, the total consumption scale of my country's tool market in 2021 will be approximately 47.7 billion yuan, and the imported tool scale will be 13.8 billion yuan. Most of them are high-end tools required by modern manufacturing. From 2016 to 2021, the proportion of imported tools in total consumption decreased from 37.2% to 28.9%, indicating that my country's self-sufficiency of CNC tools is gradually increasing and the speed of import substitution is accelerating.
Sandvik is currently the world's largest supplier of machine tools. Sandvik was founded in Sweden in 1862 and listed on the Stockholm Stock Exchange in 1901. It has now become the world's leading manufacturer of advanced multinational products. The company is an engineering group in mining and rock excavation, rock processing, metal cutting and materials technology, and is committed to providing optimized products and solutions based on digital, innovative and sustainable engineering. Under Sandvik Banner are well-known brands such as Sandvik Coromant, Seco, Walter and Valenit. The market share of cemented carbide, high-speed steel tools and other material products produced by its subsidiaries has always ranked first in the world in the market.
Sandvik is the world leader in the tool industry, with global revenue of 99.1 billion Swiss francs in 2021. In recent years, the company's operating income and net profit attributable to shareholders have both shown an increase trend. Affected by the new crown epidemic, the company's performance in 2020 declined sharply, and its performance in 2021 rose rapidly, with global revenue reaching 99.1 billion Swiss francs. The company's profitability remained high, with a net profit attributable to shareholders of RMB 14.5 billion in 2021, and a gross profit margin stabilized at nearly 40%, reaching 40.5% in 2021; the net profit margin showed a volatile upward trend, reaching 14.6% in 2021, an increase of 4.5pct from 2020.
Sandvik technology accumulation is leading the world and can provide overall solutions according to downstream needs. From 2016 to 2020, Sandvik's R&D expenses remained at 3-4 billion Swiss francs, with a R&D expense rate of nearly 4%, and R&D expenses were stable; the company's technology is in an absolute leading position in the industry, and the number of valid patents currently reaches about 6,400, and a large number of new patents are maintained every year. From 2016 to 2021, the company's annual patents were between 800 and 1,200. The company has rich products and experience in metal cutting tools, construction and mining equipment facilities, stainless steel materials, special alloys, metal and ceramic resistive materials, and transmission systems, and can provide overall solutions for downstream industries such as aerospace, automobiles, molds, machinery, petrochemicals and new energy.
The downstream environment of the industry is complex, and non-standard demand highlights the importance of comprehensive resolution capabilities. The downstream industry environment is complex and there is a diverse demand for tool technical parameters.Taking the overall solution of the automobile as an example, it includes multiple parts such as the gearbox, engine and other parts, among which the gearbox also includes parts such as shaft, gear and shift sleeve; the engine also includes cylinder block, cylinder head, crankshaft, camshaft and connecting rod; other parts include parts such as turbocharger, housing, steering knuckle and brake calipers. The tool parameter requirements for each part are different, so compared with a single blade tool manufacturing, the tool manufacturer's comprehensive solution capabilities are more prominent. Sandvik connects with downstream customers and provides customized overall solutions with room for development according to customer needs. This is also the leading position of European and American companies represented by Sandvik over Japanese, Korean and Chinese companies.
With the gradual improvement of the technical level of the global tool industry, comprehensive solution capabilities have gradually become the future development direction of the industry. Leading technical level is an indispensable condition for enterprises to become the leader in the industry, but with the overall improvement of the industry's technical level, the importance of tool companies' comprehensive solution capabilities has become increasingly obvious. Comprehensive solution capabilities can effectively increase value and enhance stickiness with customers. Sandvik In connection with downstream customers, based on leading technical reserves, Sandvik is not only selling tools, but can provide overall solutions according to customer needs, further increasing development space; on the other hand, comprehensive solutions can effectively improve stickiness with customers, thereby further strengthening its own competitiveness. In the long run, the leap from product technology advantages to comprehensive solution capabilities is a key step in growing from a leading company to a giant. (Report source: Future Think Tank)
4.2. Globalization: Strive to expand overseas business and enter the vast international market
The global cutting tool market size is 5 times higher than the domestic market size, and it attaches more importance to overall solution supply capacity and has higher value. In 2020, the global cutting tool market size reached US$37 billion, exceeding 5 times the domestic market size. International customers not only have higher requirements for tool technical indicators, but also have higher demands for comprehensive solutions supply capabilities, and the added value will be higher. For domestic manufacturers, while deepening their domestic market, they must increase their efforts to expand overseas business and open up space for long-term growth. While stabilizing the domestic market, the leading tool manufacturers have continuously increased their overseas business expansion efforts: Zhuhard European company "Diamond Brand" cemented carbide successfully entered the European market and gained wide recognition in the European market. Huarui Precision continuously improves the layout of overseas distribution dealers, enhances the overseas awareness of products, and lays the foundation for the company to participate in international competition in the future.
4.3. Industrial chain integration: raw material prices fluctuate, and the advantages of integrated operations highlight
Tungsten carbide in cemented carbide accounts for more than 80%. The company has a high proportion of raw materials. The main raw materials are tungsten carbide and cobalt powder, of which the amount of tungsten carbide in raw materials accounts for about 86%.
The trend of upstream and downstream integration of cemented carbide industry has been enhanced. The cemented carbide and tool industry belongs to the middle and lower reaches of the cemented carbide industry chain. The upstream is the mining and smelting industries of metal compounds such as tungsten and cobalt and powders, and the downstream is the application fields such as mechanical processing, petroleum and geological mining, automobile manufacturing and aerospace. Due to the large number of cemented carbide subdivided products and a wide range of downstream applications, there have been certain barriers between various market segments for a long time. The fluctuations in upstream raw material prices have a great impact on the production and sales of tool manufacturers. Industry enterprises need to continuously strengthen the integrated layout of the upstream industrial chain to reduce the impact of raw material fluctuations on corporate operations, form a competitive pattern of coordinated development of upstream and downstream of the industrial chain, and enhance market competitiveness.
. Key industry companies: capacity expansion + technology upgrade, domestic substitution is carried out step by step 5.1. Zhongtungsten High-tech: Cemented carbide leads domestic substitution, photovoltaic tungsten wire opens up growth space
Zhongtungsten High-tech is a platform enterprise in the integrated management and operation of the tungsten industry under Wumin Group. It manages and operates a complete tungsten industry chain integrating mining, smelting, processing and trade. It is mainly engaged in the research, development, production and sales of hard carbide and non-ferrous metals and their deep-processed products. Zhongtungsten High-tech is huge in scale and its subsidiaries are strong, including Zhuzhou cemented carbide group, Zhuzhou diamond, a comprehensive supplier of cemented carbide cutting tools, Jinzhou Precision, a comprehensive supplier of precision micro drill bits and tools for PCB, Zigong cemented carbide company, a leader in the field of tungsten-based hard surface materials, and Nanchang cemented carbide company, a tungsten powder product base, are all leading companies in the industry.
Zhongtungsten High-Tech's main products are cemented carbides, cutting inserts and tools, compounds and powders and other products. The products cover the upstream and downstream of the cemented carbide industry chain, and are widely used in downstream fields, such as automobile manufacturing, CNC machine tools, aerospace, military industry, mechanical mold processing, IT industry processing, ships, marine engineering equipment and other manufacturing and processing fields. China Tungsten High-Tech's revenue grew steadily, and its net profit attributable to shareholders increased significantly in 2021. China Tungsten High-Tech's 2021 revenue was 12.1 billion yuan, a year-on-year increase of 21.9%; net profit attributable to shareholders was 528 million yuan, a year-on-year increase of 138.6%. In 2021, due to the severe impact of the epidemic abroad and the transfer of the industrial chain to China, China Tungsten High-Tech's operating income and net profit attributable to shareholders increased significantly. The sales revenue of cutting tools increased by 500 million yuan, and the sales revenue of trade and equipment increased by about 100 million yuan compared with last year, with outstanding performance. Among the business, the gross profit margin of blades and tools is the highest. Although there is a downward trend in 2021, it still maintains a high of 35.4%, and the main products have strong profitability.
company focuses on R&D investment and has strong R&D capabilities. China Tungsten High-Tech's R&D expense ratio has remained stable at more than 3% in the past three years. In 2021, R&D investment reached 400 million yuan, and R&D expenditure continued to increase. Zhongtungsten High-Tech has the only national key laboratory in the cemented carbide industry. In 2021, there were 1,073 professional R&D personnel, accounting for 12.8% of the company's employees, of which 917 were undergraduate or above, with high professional qualities. In 2021, the company obtained 163 authorized patents, including 49 invention patents; as of the end of 2021, the company has held a total of 1,487 valid patents, including 571 invention patents and 16 overseas patents. Zhongtungsten High-tech's strong R&D strength has laid a solid foundation for the upgrading of its products and the development of new products.
Zhongtungsten High-tech Production Capacity continues to expand and continues to explore domestic and foreign markets. The production capacity of Zhongtungsten High-tech Crop Drill is about 100 million CNC blades, Jinzhou has a production capacity of 500 million micro drills, and a self-hardening capacity of 10 million CNC blades, which has occupied an important domestic market. With the intensification of China's epidemic prevention and control and the removal of the industrial chain, China Tungsten High-Tech plans to accelerate its expansion in overseas markets. Both CNC blades and micro-drills have capacity expansion plans, and the overall tool production line is rectified to accelerate product production and upgrades. The company's capacity expansion is progressing steadily. The company's CNC blade production will be 109 million pieces in 2021, and in 2022, it plans to add 20 million pieces of CNC blade annual production capacity. Zhujiu Company will add 10 million pieces of precision cutting blade production capacity, mainly used in the aerospace and automotive fields.
layout photovoltaic tungsten filaments is expected to open up a new growth curve. The photovoltaic industry continues to be in high prosperity, and the demand for silicon wafers has increased rapidly, driving the demand for diamond wires to maintain rapid growth. Industry progress has continuously put forward higher requirements on the diameter of diamond wires. With its excellent physical characteristics, tungsten wire is expected to undertake the urgent need for the iteration of cutting wire master wire products. On February 24, 2022, the 9th Board of Directors of China Tungsten High-Tech reviewed and passed the "Proposal on the Energy Expansion and Renovation Project of the Self-hardening Company's New Annual Production of 10 billion meters of Fine Tungsten Wires", and agreed that the Chengdu Branch of the Self-hardening Company raised a self-financing 97.92 million yuan to build a high-strength fine tungsten wire production line with an annual production of 10 billion meters, which is mainly used for the photovoltaic industry. The project construction period is 9 months and is expected to be put into production by the end of 2022, which is expected to open a new growth curve for the company.
5.2. Oukeyi: a leading enterprise in serrated blades, the rapid growth of CNC tools is promising in the future
Oukeyi was established in 1996. It is a high-tech enterprise specializing in the research and development, production and sales of cemented carbide products and CNC tool products. It has independent R&D and innovation capabilities. It was successfully listed on the Shanghai Stock Exchange Science and Technology Innovation Board on December 10, 2020. It is the first Science and Technology Innovation Board listed company with cemented carbide tools as its main business. The company is the largest serrated blade enterprise in China. The technology of cemented carbide serrated blade products ranks among the forefront in China. Since 2011, the company has relied on its mature experience in cemented carbide products to extend its business to the CNC blade manufacturing field, opening the second growth curve, and forming an industrial synergy advantage. It has now developed into one of the main manufacturers of domestic CNC blades.
Oukeyi's main products are divided into CNC tools and cemented carbide products. CNC tool products are mainly CNC blades, which are widely used in the processing of general machinery, automobiles, molds and other parts; cemented carbide products are mainly serrated blades, circular blades and rods, which are processed into cemented carbide cutting tools, which are widely used in metal processing in various fields. In 2021, Oukeyi's revenue grew rapidly, and its net profit attributable to shareholders doubled. In 2021, Oukeyi gained a large number of sales markets with excellent performance products and leading brands of the company, achieving a significant increase in sales revenue and net profit attributable to shareholders. In 2021, Oukeyi's revenue reached 990 million yuan, a year-on-year increase of 41%; net profit attributable to shareholders was 222 million yuan, a year-on-year increase of 106.8%.
Oukeyi period cost control is good. Oukeyi's management expense rate, sales expense rate and financial expense rate are all showing a downward trend.
The company's production capacity continues to expand, helping to achieve rapid growth in performance. In 2021, the company's CNC blade production exceeded 80 million pieces, and has grown into the leader of domestic private enterprises for cemented carbide CNC tools. It is expected that the company's production capacity will further increase to more than 100 million pieces in 2022, further breaking the important factors that restrict the company's performance release. According to the announcement, the company plans to issue an additional 800 million yuan to the construction of CNC tool industry park (600 million yuan) and replenish working capital (200 million yuan). The industrial park project is expected to invest 749 million yuan, with a construction period of 18 months, adding 1,000 tons of high-performance bars, 3 million integral carbide tools, 200,000 sets of CNC tools, 5 million cermet blades and 10 tons of metal ceramic sawtooth production capacity. After full delivery, it is expected to increase annual income of 640 million yuan and net profit of 130 million yuan each year.
The company continues to optimize its business structure and sales model, and the overall solution is on the verge of on the string. On the basis of maintaining the dominant position of traditional cemented carbide products, the company's high-gross profit CNC tool business has grown rapidly. The company's sales model is mainly direct sales and supplemented by distribution. It is currently actively developing towards the terminal dealer model. At the same time, the company actively extends the industrial chain vertically and horizontally, expands the company's product coverage, continues to increase its investment in high-end products, and strives for the high-end market. It has increased the overall tool solution development for end customers, vigorously promotes domestic substitution, and continuously strengthens the ability to meet the overall tool needs of end customers in one-stop, and the overall cutting solution provider has a promising growth.
5.3. Huarui Precision: Four core technologies build barriers, and capacity expansion ensures steady progress. Yuan
Huarui Precision is a domestic advanced cemented carbide cutting tool manufacturer, mainly engaged in the research, development, production and sales of cemented carbide number control blades. The company focuses on the research and development and application of cemented carbide CNC inserts, constantly pursuing the improvement of the overall performance of cemented carbide CNC inserts and the optimization of manufacturing processes, forming independent core technologies in four major fields: matrix materials, groove structures, precision molding and surface coatings, and has developed three series of products: turning, milling and drilling. The company's core products are at the domestic advanced level in terms of cutting performance, especially milling inserts, which have formed a significant competitive advantage. The company has become a leading manufacturer of cemented carbide cutting tools in China, rated as a national high-tech enterprise, and is a "specialized and new 'little giant' enterprise" recognized by the Ministry of Industry and Information Technology.
Huarui Precision's main products are carbide tools.Cemented carbide CNC tools are the company's main products. They can be divided into three series according to the cutting method: turning, milling and drilling. Cemented carbide tools are the core components for metal cutting processing for CNC machine tools. They are widely used in metal material processing in general machinery, automobiles, rail transportation, aerospace, precision molds, new energy and other fields. In 2021, we will form a direct sales team to increase the development of direct sales customers, and we have made progress in the development of key customers in the aerospace field. Huarui Precision's revenue growth is stable, and its performance in 2021 is impressive. The company's operating income in 2021 was 485 million yuan, a year-on-year increase of 55.5%; net profit attributable to shareholders was 162 million yuan, a year-on-year increase of 82.4%. Huarui Precision's revenue increased significantly in 2021. Thanks to the impact of the epidemic abroad and the transfer of the industrial chain, sufficient orders and full production capacity were fully released.
Huarui Precision Turning Insert revenue grew the fastest, and the gross profit margins of various products remained stable. The company's turning insert revenue increased by 132 million yuan in 2021, and its gross profit margin increased slightly to 47.31%. The sales revenue of milling inserts and drilling inserts also showed an increase, with the gross profit margin of milling inserts slightly falling to 55.86%, and the gross profit margin of drilling inserts remained at a high of nearly 80%.
Huarui Precision focuses on research and development and accumulates four core technologies in the field of cemented carbide. Huarui Precision adheres to the development strategy of "independent research and development and continuous innovation", focuses on the research and development and application of cemented carbide CNC blades, and constantly pursues the improvement of the overall performance of cemented carbide CNC blades and the optimization of manufacturing process. The company's R&D expenses have gradually increased. In 2021, R&D expenses were nearly 25 million, and the R&D expense ratio has always remained above 5%. In 2021, the company obtained 13 new patents, including 7 invention patents, 4 utility model patents and 2 design patents. As of the end of 2021, the company had 46 authorized patents, including 17 invention patents. In 2021, there were 91 R&D personnel, accounting for 16.49% of the company's total number, of which 67 were undergraduate or above, covering R&D fields such as cemented carbide CNC blades, knife bodies and overall tools. The company has accumulated four core technologies in the fields of matrix materials, groove structures, precision molding and surface coatings. It has strong independent design capabilities, which will help the development and upgrading of new products.
four core technologies are escorted, and the overall cutting performance is comparable to Japanese and Korean products. The company is one of the few companies in the domestic cemented carbide CNC blade industry that has complete production processes from ingredients to automatic packaging. At the same time, it masters and continues to deepen the four core technologies. It has obvious cost-effective advantages when compared with Japanese and Korean products in terms of product core indicators such as coating, cutting force, chip breaking effect, wear performance and surface roughness. It is expected to further accelerate the replacement of high-end imported tool products in terms of product performance and service advantages. The fundraising and investment projects are about to be put into production, and the performance is expected to continue to be realized. In 2021, the company's turning insert production was about 49.67 million pieces, milling insert production was about 27.84 million pieces, and drilling insert production was about 2.08 million pieces. The company's IPO fundraising project, CNC tool digital production line project is expected to be put into production in the second half of 2022. After the project is completed, 30 million carbide CNC blades, 5 million cermet CNC blades, and 2 million carbide overall tools will be added. At the same time, the company's 400 million yuan convertible bond project successfully passed the review, and after reaching production, it achieved a production capacity of 500,000 precision CNC tool body products and 1.4 million various high-efficiency drilling tools annually. While the IPO fundraising and investment projects are put into operation and convertible bond projects successfully, they will expand production capacity, enrich categories, and continue to realize their performance, and will also improve the company's comprehensive cutting service capabilities, laying the foundation for the company's future transformation into an overall solution supplier in the long run.
5.4. Wald: The invisible champion of super hard tools, a multi-pronged approach opens the second growth curve
Wald is a high-tech enterprise mainly engaged in the research, development, production and sales of super hard tools and super hard material products. In 2006, the company's predecessor, Haoqi Innovation, was established in Zhongguancun Electronic City Science and Technology Park. It was officially renamed Beijing Wald in 2008. It completed the shareholding reform in 2015 and was listed on the Shanghai Stock Exchange Science and Technology Innovation Board in 2019.Wald mainly focuses on glass cutting tools, ultra-hard cutting tools, PCD wire drawing die cores, and foreign incoming materials processing businesses. It has always been deeply engaged in the field of super-hard materials. Its products are widely used in consumer electronics, automobile manufacturing, engineering machinery, aerospace, energy equipment and other industries.
Wold is deeply engaged in super hard tools, and its main products are hard tools and super hard material products. The company's Super English tool products cover diamond cutting wheels, reamers, milling cutters, PCD/PCBN CNC blades and other products. Superhard material products include superhard composite sheets, wire drawing cores and CVD diamond materials and products. The company started its business with diamond knife wheels and has successfully entered downstream core customers such as BOE, Huaxing Optoelectronics, and Tianma, becoming a leading domestic diamond knife wheel company. In the field of high-precision PCD and PCBN tool products, the company has gradually entered high-end markets such as wind power generation, rail transit, aerospace, etc. with its high cost performance and service advantages, and has made breakthroughs in major customers such as Schaeffler and SKF, and has expected future development. Wald's performance stabilized and rebounded in 2021. In 2020, due to the impact of the epidemic, the company's performance declined sharply. With the help of overseas distribution forces and business expansion, the company released revenue and net profit attributable to shareholders. In 2021, the company's performance stabilized and rebounded. The company's operating income in 2021 was RMB 326 million, a year-on-year increase of 34.7%; the net profit attributable to shareholders was RMB 54 million, a year-on-year increase of 10%.
Wold's sales expense ratio and financial expense ratio remain stable, and the administrative expense ratio has increased. Walld's sales expense ratio and financial expense ratio remained basically stable, and the increase in the management expense ratio was mainly caused by the increase in share payment expenses, management personnel compensation, consulting service expenses, etc.
Wold continues to increase R&D investment and comprehensively improves product innovation capabilities. The company's R&D expenses have gradually increased. In 2021, R&D expenses were nearly 28 million yuan, and the R&D expense ratio has always remained above 6%. In 2021, the R&D expense ratio has increased to 8.7%. In 2021, the company obtained 44 new domestic and foreign patents, including 5 invention patents, 29 utility model patents, and 10 appearance patents. As of the end of 2021, the company has owned 239 domestic and foreign patents, including 35 invention patents, 176 utility model patents, and 10 appearance patents. In 2021, there were 111 R&D personnel, accounting for 15.21% of the company's total number, of which 58 were undergraduate or above. The company continues to increase its investment in patent research and development, comprehensively improves the company's innovation capabilities in ultra-hard tools, and serves customers better and more comprehensively. The company's independent core technologies are mainly divided into four categories: "superhard material laser micro-nano precision processing technology", "vacuum environment processing technology", "PCD ultra-thin polychip and composite sheet precision grinding and mirror polishing technology", and "automation equipment development technology".
Invest in CNC blade project to achieve rapid growth in production capacity. In 2021, the company's high-precision tool production was 3.3644 million pieces, ultra-high-precision tool production was 679,200 pieces, and super-hard composite material was 256,200 pieces. The company raised 210 million yuan to invest in the construction of the "Coated Carbide CNC Blade and Metal Ceramic CNC Blade Project", introduces advanced production equipment and instruments at home and abroad, and builds coated carbide CNC Blade production lines, factory buildings, office bases and related warehousing and other supporting facilities. At the same time, it is built a R&D center, purchases advanced R&D equipment and introduces excellent R&D talents. After the project is completed, it is expected to produce 28 million coated carbide CNC Blades and Metal Ceramic CNC Blades annually. Continue to increase the investment in tool business, and the merger and acquisition of Xinjinquan plan is reviewed and approved by the Shanghai Stock Exchange. The company is planning a major asset restructuring and plans to introduce Xinjinquan Company, which has deep technical accumulation and business resources in the precision processing field of the 3C industry, and further expand the service scope of the precision processing field of the 3C industry with the help of Xinjinquan customized tool products, improve Wald's sub-industry layout, and enhance the comprehensive competitiveness of listed companies. The merger and acquisition plan has been approved by the Shanghai Stock Exchange and has been registered and approved by the China Securities Regulatory Commission.(Report source: Future Think Tank)
5.5. Xinrui Co., Ltd.: a leading enterprise in mining cemented carbide, entering the CNC blade growth rate
Xinrui Co., Ltd. was established in August 2005. It has R&D, production and manufacturing bases in two first-tier cities, Suzhou and Wuhan. It holds shares in the United States and AMS in Australia. It is an international manufacturing service provider focusing on cemented carbide products, mining rock drilling tools and mining services, integrating R&D, manufacturing, sales and services. In 2021, it was awarded the recognition of "National Specialized and New Little Giant" and was officially listed on the Shanghai Stock Exchange Science and Technology Innovation Board in October of the same year. The company adheres to the direction of internationalization, modernization and integration of manufacturing services, adheres to the implementation of overseas development strategies, cross-border development and actively participates in the national economic strategy of the "Belt and Road", and strives to build a world-renowned brand of cemented carbide and mining rock drilling tools.
Xinrui Co., Ltd.'s main products are cemented carbide, cemented carbide tools and supporting products. The company's main products include cemented carbide, cemented carbide tools, and supporting products provided according to customer needs. In the field of cemented carbide tools, the company's products are positioned at mid-to-high-end, and the domestic sales share of mining wheel drill bits is far ahead. It ranks in the top three mining market share in Australia and South America, and has entered the supply system of the top four major iron ore companies. It has the strength to compete with multinational companies such as Sandvik and Atlas in this segment. It is a leading mining carbide company. As the company's fundraising and investment projects are put into production, it is expected to continue to expand new markets, increase market share, and consolidate and strengthen its leading position. Product applications cover industries such as mining, oil drilling, engineering machinery, metal cutting machine tools, automobile manufacturing, electronic information, aerospace and military industry. In 2021, Xinrui Shares' revenue stabilized and rebounded, and the growth rate of net profit attributable to shareholders fell. Faced with the repeated COVID-19 epidemic and the complex and changing market environment, the company has continuously improved product quality and comprehensive service capabilities, expanded production capacity construction, and achieved operating income of 894 million yuan in 2021, a year-on-year increase of 22.6%; net profit attributable to shareholders reached 136 million yuan, a year-on-year increase of 19.4%.
company period expense rate is showing a downward trend. In 2021, the period expense ratio of Xinrui Shares was about 18%. According to detailed information, the management expense ratio and sales expense ratio both showed a downward trend year by year.
Company focuses on R&D investment and has strong R&D capabilities. The R&D expense ratio of Xinrui shares has remained stable at 5% in the past three years. In 2021, R&D expenses reached 43 million yuan, and R&D expenses continued to increase. In 2021, the company had 91 professional R&D personnel, accounting for 11.4% of the company's employees, of which 75 were undergraduate or above, with high professional qualities. In 2021, the company obtained 10 authorized patents, including 3 invention patents and 7 utility model patents; as of the end of 2021, the company has obtained a total of 164 domestic patent authorizations, 43 domestic invention patents, and 121 utility model patents. Xinrui Co., Ltd. continues to increase R&D investment, laying the foundation for the company to focus on the mid-to-high-end application fields of cemented carbide through the dual-wheel drive of technological innovation and new product development.
Integrated development of the industrial chain, transforming into a supplier of comprehensive solutions for mining consumables. The company has entered the supply chain of overseas mining giants based on excellent performance and cost-effective wheel drill bits. The demand feedback from clients can also feed back the research and development and innovation of cemented carbides. The company acquired Australian AMS and established US AMS. While strengthening its control over the sales channels of mining companies, it has gained channels and experience in providing comprehensive services to mining companies, so as to provide fundamental companies with comprehensive solutions for mining and exploration of consumables to large overseas mining companies. Relying on the advantages of integrated industrial chain, the company has gradually changed to focus on customer systemic needs, actively adjusting its product structure, strengthening supporting services, and striving to transform from a single tool manufacturer to a comprehensive service provider. The acquisition of Zhuzhou Weikai will deploy CNC tools, and its future growth is promising. Zhuzhou Weikai masters the core technologies of CNC blade base materials, groove structures, finishing processing, surface coating and other production processes, and the annual output capacity will be about 8 million pieces in 2021. In January 2022, the company acquired 66% of its equity and actively deployed its CNC blade business.After the merger and acquisition is completed, the company will give full play to the synergistic effect and help Zhuzhou Weikai in terms of capital, technology, market, etc., benefiting from the wave of domestic substitution of CNC blades, further enhancing the company's technical accumulation and strength in the field of cemented carbide cutting tools, improve the layout of the cemented carbide industry, and enhance the company's operating efficiency and sustainable development capabilities.
(This article is for reference only and does not represent any of our investment advice. If you need to use relevant information, please refer to the original text of the report.)
selected report source: [Future Think Tank]. Future Think Tank - Official Website
