Original title: No dividends have been distributed for ten years, and performance depends on subsidies. Faced with the trend of " Fast acquisition + domestic replacement of high-end machine tools", can Qinchuan machine tools be shamed before they can be brave?
cumulatively raised 4.13 billion yuan, with dividends of only 120 million yuan.
Author | Tashan
Edit | Xiaobai
Machine tool is a machine that manufactures machines and is also a machine that manufactures the machine tool itself. Therefore, the machine tool is also called "industrial mother machine" or "machine machine".
Regarding industrial mother machine, Fengyunjun has previously published several special analysis. For details, please download Market Value Fengyun app to view.
(Source: Market Value Fengyun App)
The old domestic machine tool companies that once known as the "four major machine tools" are: Shenyang Machine Tool , Dalian Machine Tool, Qinchuan Machine Tool, Kunming Machine Tool . Now only Qinchuan Machine Tool and Shenyang Machine Tool (*STShenji HTML ) are left.
This article focuses on analyzing Qinchuan Machine Tools Group Co., Ltd., hereinafter referred to as Qinchuan Machine Tools or Company.
1. Historical performance is basically subject to government subsidies. Premium mergers and acquisitions are to protect the shell
First look at the company's historical performance.
From 2015 to 2019, the net profit attributable to the parent was negative for five consecutive years due to deducting non-operating items, and the net profit attributable to the parent in 2016 and 2017 also barely turned positive.
Due to negative audited net profits for two consecutive accounting years in 2018 and 2019, the company has been delisted by the Shenzhen Stock Exchange since the opening of the market on April 23, 2020.
The company's historically non-recurring gains and losses has a large amount. Combined with previous financial reports, the most affected account is other income, mainly government subsidies, and some government subsidies are included in non-operating income. The deferred income of in are all government subsidies, and the overall amount is relatively large.
Part of the government subsidy projects are as follows:
(Source: 2021 Annual Report)
Government subsidies account for a large proportion of the total profit. In other words, if there is no government subsidy, the company may face the risk of delisting a long time ago.
In April 2020, Shaanxi Fast Automobile Transmission Group Co., Ltd. (hereinafter referred to as Fast) obtained 15.94% of the company's shares transferred free of charge by the Shaanxi Provincial State-owned Assets Supervision and Administration Commission, and also owned 13.24% of the voting rights entrusted by Shaanxi Industrial Investment, with a total voting rights of 29.18%.
At this point, Fast has officially become the controlling shareholder of the company, and its actual controller is still the Shaanxi Provincial State-owned Assets Supervision and Administration Commission. The company's new chairman Yan Jianbo is also the chairman of Fast Group.
Shaanxi Fast Automobile Transmission Group Co., Ltd. (hereinafter referred to as Fast) is the world's largest commercial vehicle transmission manufacturer. Its products are widely used in various models such as heavy-duty vehicles, large passenger cars, medium- and light trucks, engineering vehicles, mining vehicles, and low-speed trucks, and its domestic market share exceeds 70%.
Immediately afterwards, in June 2020, the company acquired 100% of the equity of Shaanxi Fast Walker Gear Co., Ltd. (hereinafter referred to as Walker Gear) held by Fast for 429 million yuan in cash. The acquisition was a premium of 248 million yuan. Fast promised that Walker Gear's total net profit attributable to shareholders in 2020, 2021 and 2022 will not be less than 163 million yuan.
(Source: June 2020 Announcement)
It should be noted that: Among the top five Walker Gear customers in recent years, related parties have contributed most of the revenue.
(Source: June 2020 Announcement)
In 2020, Walker Gear achieved a net profit of 98 million yuan with non-recurring profit of 98 million yuan, significantly exceeding the performance commitment of 56 million yuan, while the company's net profit attributable to shareholders with non-recurring profit of 42 million yuan in 2020. It can be said that the turnover of losses in 2020 is inseparable from Walker Gear's performance contribution.
In short, after such a series of operations, the company was revoked from the delisting risk warning from May 17, 2021, and the shell has been saved.
(weekly K-line. Source: Market Value Fengyun APP)
2. Fast took over, and its business improved significantly. After Fast took over, the company's performance improved significantly, and its net profit attributable to shareholders has been positive in the past two years.
From the perspective of performance growth rate, the revenue growth rate has increased significantly in the past two years. In addition, the growth rate of net profit attributable to shareholders has been significantly higher than the revenue growth rate. The revenue growth rate in 2021 was 23.4%, and the growth rate of net profit attributable to shareholders was 83.7%. Although the gross profit margin and net profit margin are generally at a low level, the improvement in the past two years has been significantly improved. The main reasons include:
(1) parts business. Due to the relatively high gross profit margin of Walker gear, the overall increase in gross profit margin after the acquisition is completed;
(2) machine tool business, the market share of high-end products has increased, the product structure has improved, and the profitability has been improved;
(3) The production capacity has been released, and the gross profit margin has improved under the scale effect.
In fact, the main impact of Fast's entry is the transformation of operational efficiency. In 2020, the company launched internal reforms comprehensively:
(1) promoted organizational adjustments and established a new organizational structure for the group headquarters and Qinchuan Machine Tool Headquarters;
(2) fully completed the work of fixed-level and staffing, and optimized and adjusted personnel;
(3) rebuilt the group's comprehensive budget and performance appraisal management system;
(4) Implement the KPI performance appraisal system for all employees, etc.
The expense ratio has been greatly reduced in the past two years, indicating that the internal reform has achieved certain results.
From 2015 to 2020, the company's gross profit was not enough to fill the period expenses, which is also one of the main reasons for the poor historical performance. The expense ratio has been significantly reduced in the past two years, and performance has also improved accordingly.
R&D investment has basically maintained a steady increase in recent years. The significant increase in 2019 is mainly because the Ministry of Industry and Information Technology has stepped up the progress of the completion and acceptance of corporate R&D projects.
However, the company has partially capitalized its R&D investment. Overall, the proportion of capitalized R&D investment has declined significantly in recent years, and accounting treatment is much more cautious than before.
In 2021, the debt-to-asset ratio dropped sharply, and interest-bearing liabilities basically returned to a relatively safe level.
debt repayment ability has been significantly improved in the past two years. In 2021, trading financial assets and monetary funds can basically cover interest-bearing liabilities, which is significantly improved compared with history.
Historically, the cash flow of performed poorly. In the past two years, both operating cash flow and free cash flow have turned positive, and the cash flow situation has improved significantly.
3. The main business of machine tools has come out of the trough, and the business status of reducer has improved significantly
The company's revenue mainly includes machine tool business and parts business. In 2021, the revenue of machine tool business accounted for 48%, and the revenue of parts business accounted for 32.7%. The total revenue of the two accounts for about 80%.
(Source: Tonghuashun iFinD)
machine tool products mainly include: high-end CNC lathe , machining center/five-axis composite machining center, cylindrical grinder , gear processing machine tool, thread grinder , etc.
(Source: Official website)
Parts and components products mainly include: rolling functional parts, automotive parts, special gear boxes, synchronizer , power take-up , screw rotor pair, precision gears, precision instruments and meters, precision castings, reducers, etc.
(Source: Official Website)
01 CNC machine tool industry competition focus in the high-end market
Domestic CNC machine tool products mainly include three categories: metal cutting machine tools, metal forming machine tools, and special processing machine tools.
Among them, metal cutting machine tools have the largest scale, accounting for about 53.2% of the total product scale, and metal forming machine tools and special processing machine tools account for about 28.5% and 16.8% of the total product scale, respectively.
From the perspective of the downstream application distribution of CNC machine tools, the automotive industry accounts for about 40%, and the proportion of aerospace applications is about 17%. The two together account for more than 50% of the total downstream industries; molds and engineering machinery are the third and fourth application areas of machine tool products, accounting for about 13% and 10% respectively.
(Source: Kede CNC prospectus, Huaxin Securities Research)
CNC machine tools are a relative and dynamic concept. The classification of low-end, medium-end and high-end CNC machine tools is shown in the following table:
(Source: Newway CNC prospectus)
According to data from the Forward-looking Industry Research Institute, in 2018, my country's domestic production rate of low-end CNC machine tools was about 82%, mid-end CNC machine tools were about 65%, and high-end CNC machine tools were only about 6%, and domestic replacement space for high-end CNC machine tools was still relatively large.
(Source: Forward Research Institute, Huaxin Securities Research)
In addition, the machine tool industry has cyclical characteristics. Represented by metal cutting machine tools, the output in 2011 was 860,000 units, reaching a historical peak; in 2015, the industry adjusted in depth, and the period from 2015 to 2019 was a low period, and there were signs of significant improvement since 2020.
(Source: Tonghuashun iFinD)
The current basic development logic of the industry is as follows:
(1) Update requirements: The service life of the machine tool is generally about 10 years, and the product begins to enter the peak period of renewal from 2021. The output of metal cutting machine tool in 2021 is metal cutting machine tool It is 600,200 units, a year-on-year increase of 35%, but it is still 70% of the 860,000 units in 2011, and the potential for stock updates is to be released;
(2) Independent and controllable: As industrial mother machines, machine tools need to be independent and controllable, and accelerating the upgrade of intelligent manufacturing will promote the import substitution of domestic brands;
(3) Downstream prosperity: Some industries represented by automobiles in the downstream industries are currently in high prosperity.
02 main machine tool business has come out of the trough, and the revenue share of parts business has continued to increase
. Against the backdrop of the industry's recovery, the company's machine tool business has grown in the past two years. The revenue growth rate in 2021 was 42.5%, a new high since 2015, and the overall trend is out of the trough.
The gross profit margin of the machine tool business is also showing a positive trend, mainly due to the increase in the market share of the high-end market of the machine tool business and the improvement of the product structure, which in turn drives the increase in gross profit margin.
In addition, the competition focus of the machine tool business is mainly on the high-end market. There is a lot of room for domestic substitution of high-end machine tools. Part of the company's machine tool business in the high-end market is as follows:
(1) Five-axis machining center (high-end CNC machine tools) won the bid for strategic users in aerospace, navigation and other fields. The accuracy of the core functional components of five-axis machining center has reached the domestic technological leadership level, and can replace imports to solve the "bottleneck" problem of key processes of aviation and aerospace enterprises;
(2) In the export market, the revenue of high-end products in 2021 increased by 53.6% year-on-year.
Most of the projects under construction involving machine tool business in the past two years have been completed and production capacity has been released, which is also the basis for performance growth.
(Source: 2021 Annual Report)
Parts, in terms of business growth rate, the growth in 2020 was significant, mainly due to the acquisition of Walker Gears. Corresponding to
, the revenue share of parts business has also increased significantly in the past two years. In addition, since 2015, the revenue share of parts business has maintained an increase.
03 reducer business development has accelerated
(1) The reducer business status has improved and has industrial synergy advantages
In addition to machine tools, the company's robot reducer business has been attracting much attention for many years. Before 2020, reducers belong to the scope of parts business.
In 2020, the company proposed the "5221" development strategy for the revenue structure for the first time: machine tool hosts account for 50%, high-end manufacturing accounts for 20%, core parts account for 20%, and intelligent manufacturing and core CNC technology account for 10%. Reducers are officially included in the high-end manufacturing sector and are their main content, but current financial accounting is still classified as parts business.
In other words, at the strategic level, the reducer business independently became one of the core business segments, its status has been significantly improved, and strategic goals have been set for its revenue scale.
company reducer is mainly positioned as robot joint reducer, namely RV reducer . The automotive industry, machine tool industry , electronics industry, food industry, packaging industry, etc. are its target markets.
reducer business progress in the past two years is as follows:
(1) In 2020, robots achieved mass production of BX series precision cycloid planetary reducers, and their products were equipped with nearly 300 major domestic robot host companies, including Yamchuan (Shougang ), Huazhong CNC , Shanghai Huanyan, Fujian Weibai, Guangzhou CNC, American GAM company, South Korea Samsung , etc.;
(2) In 2021, robot joint reducers produced and sold more than 30,000 units, accounting for about 20-25% of the domestic RV brand market share. Currently, it has an annual production capacity of 60,000 to 90,000 sets. It is the only manufacturer in China that provides a full series of products (5-800KG). It has the only domestic technology and manufacturing advantages in key process equipment (high-end gear machine tools).
The company has a market foundation in the machine tool field. In addition, the controlling shareholder Fast is the world's largest commercial vehicle transmission manufacturer. For the development of RV reducers, its market and synergistic advantages are obvious.
(2) Why has the reducer technical transformation project been delayed?
In fact, the company's reducer business was completed as early as 2012 and successfully received government subsidies. In 2014, robot joint reducer began to be delivered and cooperated with more than 30 robot-related companies.
(Source: 2012 Annual Report)
In 2013, it began to promote the "90,000 sets of industrial robot joint reducer technology transformation project", with a planned investment of 190 million yuan.
(Source: 2013 Annual Report)
In 2019, the project was not completed, because it was expected that production difficulties were insufficient. The same was true for the previous few years.
(Source: 2019 Annual Report)
In 2021, has been 8 years since the start of construction, and the project has not been completed, which is really outrageous.
In addition, so far, the project has invested a total of 400 million yuan, about twice the initial budget, with a cumulative revenue of 196 million yuan and a cumulative rate of return of 48.7%.
(Source: 2021 Annual Report )
Combined with the financial reports over the years, Fengyunjun believes that the main reason why the reduction technology transformation project has been delayed in completion may be:
(1) Funding problems. The source of funds for this technical transformation project includes government subsidies and self-raised by enterprises. Government subsidies have received 6 million yuan of special fiscal funds, which greatly exceeds the budget. The company's historical financial situation is poor, and the self-raised part has not been filled, which will affect the progress of the project to a certain extent;
(2) Due to the long-term failure to complete, it is difficult to keep up with the latest market technical requirements, and the industry competition is becoming increasingly fierce, and technical transformation is needed.
(Source: 2015 Annual Report)
Although the company is the earliest company in the industry to deploy RV reducers, the "90,000 sets of industrial robot joint reducers technical transformation projects" has not been completed in eight years, resulting in the delay in releasing production capacity, and in a sense it has missed the first-mover advantage.
Conclusion
Overall, as a veteran state-owned machine tool enterprise, Qinchuan Machine Tool has a high dependence on government subsidies. From 2015 to 2019, the net profit attributable to the parent was negative for five consecutive years after deducting non-operating items. In 2016 and 2017, the net profit attributable to the parent was barely positive. In 2020, the proportion of government subsidies to the parent was close to 50%.
In 2020, Fast became the controlling shareholder and launched internal reforms. The company's operating conditions improved. The growth rate of net profit attributable to shareholders for two consecutive years was significantly higher than the revenue growth rate, and the profitability was improved. At the same time, the expense ratio was greatly reduced during the period, and the operational efficiency was significantly improved. Overall, all financial indicators have shown significant improvements. In terms of the main business of
machine tool, it is a trend of getting out of the trough against the backdrop of the industry's recovery. The revenue growth rate in 2021 was 42.5%, a new high since 2015, and the gross profit margin has also increased, mainly due to the increase in the proportion of high-end products and the improvement of product structure. In terms of high-end manufacturing, robot joint reducers, as the long-term business direction of their business, have significantly improved their status in the past two years, and have also put forward strategic goals for their revenue scale. In 2021, the production and sales of reducers exceeded 30,000 units, accounting for about 20-25% of the market share of domestic RV reducers.
Overall, after Fast took over, it showed a positive overall business trend. In addition, the CNC machine tool industry is in a recovery stage after a long period of adjustment.
Currently, there is a lot of room for domestic replacement of high-end machine tools. If you can seize industrial opportunities, Qinchuan Machine Tool can still make a difference.
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