(report producer/analyst: Shenwan Hongyuan Securities Zhou Yuxi Liu Jianwei)
Junchuang Technology is a high-tech enterprise integrating the research, production and assembly of automobile plastic parts, molds, and automobile metal parts.
The former company was Suzhou Junchuang Plastic Mold Co., Ltd., established in 2005. It officially transformed and focused on the automotive industry in 2010. In 2015, the company was officially listed on the New Third Board, and the following year it passed the certification of a high-tech enterprise, and continued to deepen its research and development, production and sales of automotive parts. As of the end of 2021, the company has obtained 158 authorized patents, including 16 invention patents .
In recent years, the company has continuously optimized product quality, expanded product types, and further expanded overseas markets, and continuously improved the integrated service capabilities to meet customer needs.
company equity concentration, Shen Anju and Li Xiangping are the actual controllers of the company.
As of June 30, 2022, the company's chairman Shen Anju directly held 56.30% of the company's shares, and indirectly held 1.32% of the company's shares through Chuangfuxing Enterprise Management Consulting Partnership; Li Xiangping directly held 3.61% of the company's shares. The holding ratio of Shen Anju and Li Xiangping and his wife reached 61.23%, and the company's equity was concentrated.
In addition, the company owns a wholly-owned subsidiary of Junchuang Mold (Suzhou) and two holding subsidiaries of Wuxi Ward and Junchuang North America, holding 60%/70% of the shares respectively. Among them, Junchuang Mold and Wuxi Ward are respectively engaged in the research and development and production of molds and automobile metal parts, which are an important part of the company's main business.
Figure 2: Company equity structure chart (as of June 30, 2022)
1.2 The business continues to expand, and the growth rate of new energy sector is significant
The company mainly engages in automotive plastic parts business, among which the new energy vehicle functional parts business has entered a period of rapid growth.
company started with plastic parts manufacturing. Since 2019, the company has followed the electrification tide and entered the field of tram parts, and began to provide functional parts for three-electric systems and other parts to new energy vehicle manufacturers, driving accelerated performance growth.
has formed a business model that mainly car plastic parts and supplemented by molds and metal parts, and its product forms are becoming increasingly rich. In 2021, the company's automotive plastic parts/molds/metal parts businesses achieved revenue of RMB 292/0.36/13 million, accounting for 85%/10%/4%.
New energy vehicle components open the second growth curve for the company.
The company's traditional plastic parts business is mainly divided into automobile suspension bearing series, automobile sunroof control panel series, etc. The company mainly produces the above-mentioned bearing and panel structural parts, and then handed over to downstream leading automobile supply chain companies to integrate.
In recent years, the company's products have been applied in the field of new energy vehicles, mainly used in the three-electric system of new energy vehicles, as well as chassis/door modules. This sector has grown into the largest business segment of automotive plastic parts, with revenue of 179 million yuan in 2021, accounting for more than 50% of the total revenue. The CAGR (2019-2021) reached 428%, driving the overall performance to accelerate upward.
company has a rich mold library and mold R&D design capabilities, which can meet the research and development needs of integrated injection molded parts for major customers.
company has the ability to independently develop and produce molds, which can be used to efficiently produce precision parts in large quantities, and can meet customers' diverse and customized needs.
At present, the company's molds are mainly productive molds, that is, mold customization is carried out according to downstream customer needs, and then used to produce injection molding parts required by customers.
In addition, the company's metal parts business is mainly spring clamps, which are used in traditional fuel vehicles and new energy vehicles. It is currently mainly used as a means to expand customers or meet customer supporting needs. In the future, as new energy vehicles have more and more demands for cooling systems, the application scenarios of spring clamps will become more diverse.
2021 revenue growth rate is significant, and the full-year performance in 2022 is expected.
From 2017 to 2021, the company's operating income increased from 112 million yuan to 345 million yuan, with a CAGR of 33% in four years; in 2021, the company successfully introduced the first-level supplier system of T Company, a major new energy vehicle customer, and the turning point of revenue growth that year reached 93%.
From 2017 to 2021, the company's net profit attributable to shareholders increased from 20.79 million yuan to 28.06 million yuan, and the CAGR in four years reached 7.78%. The net profit was mainly affected by the rising raw materials, high amortization of new business development, and exchange factors, and has not yet fully reflected the expectations of order growth.
2022H1 The company achieved operating income of 231 million yuan (YOY+66%) and net profit attributable to shareholders of 24.34 million yuan (YOY+132%), which has reached the level of more than 80% of the whole year last year. Orders were placed and delivered due to the impact of epidemic control in the first half of the year, and orders were expected to increase in volume in the second half of the year.
profitability has begun to be repaired, and the expense side is basically stable. From 2017 to 2020, due to the price reduction of traditional automobile injection molding parts and the slight price increase in raw materials, the gross profit margin is in a downward channel. In 2021, the company's comprehensive gross profit margin/net profit margin was 22.57%/7.59%, respectively, down 7.1/2.9pcts from the same period last year. is mainly due to:
1) Raw material prices have risen sharply since 2020, resulting in a squeeze of profitability;
2) The company's new energy functional parts business increased significantly in 2021, and the gross profit margin of this sector's business is relatively low;
3) foreign exchange losses caused by the appreciation of the RMB;
4) metal business has entered the trial production stage, and the amortization is relatively large.
With the decline in raw material prices and the depreciation of RMB exchange rate , the gross profit margin this year is expected to rebound compared with last year, and there has been a slight upward trend in 2022H1. The company's period expense ratio is relatively stable, and the overall trend is stable and downward.
export share gradually expands, and overseas holding subsidiaries are set up to better serve leading customers.
2018-2022H1 The company's export share has expanded year by year, and the proportion of total revenue has increased from 9.04% to 51.16%. The export business is mainly composed of functional components of new energy vehicles (T company's business is classified as export business).
In 2021, the company established a subsidiary of Junchuang North America Holdings to actively expand overseas customers to deploy global customer needs; in July 2022, a subsidiary of Mexican Holdings was established to further optimize the market structure and enhance the company's competitiveness in the North American market.
The development of lightweight in automobiles is one of the main ways to reduce energy consumption and emission reduction.
In recent years, due to policy factors and standard restrictions, passenger cars have been required to reduce energy consumption year by year. my country's automobile fuel consumption has dropped from 6.9L/100km in 2015 to 5L/100km in 2020. The emission improvement effect is significant, but there is still a certain gap compared with developed countries such as EU and Japan.
According to research, automobile fuel emissions are highly correlated with the body weight. For every 100kg reduction in weight of traditional fuel vehicles, the fuel consumption per 100 kilometers will be reduced by 0.3-0.6L, the reduction in carbon dioxide by 5-8g, and for every 100kg reduction in weight of pure electric vehicles, the mileage can be increased by 10%, saving 15-20% of battery costs. Therefore, lightweight automobiles are an important path to reduce energy consumption and emissions, and the development of lightweight automobiles is imperative.
modified plastic is the non-metallic material that uses the most common body and is an important means of lightweighting in automobiles.
Automobile lightweighting mainly includes three major solutions, including structural optimization design, lightweight material application and advanced manufacturing technology.
Among them, lightweight materials include metal materials ( high-strength steel , aluminum-magnesium alloy, etc.) and non-metallic materials (plastics and new composite materials, etc.).
modified plastic is the most commonly used non-metallic material in automobiles. "Plastic instead of steel" can not only achieve weight loss in the body, but also have the advantages of design freedom, rich appearance, and convenient processing, and gradually become one of the main trends of lightweight materials in automobiles. At present, plastics are mainly used in functional parts around engines, interior parts, exterior coverings and other places. In the future, with the continuous improvement and optimization of functions and processes, the application fields of plastics will become more and more extensive in the future.
Compared with other lightweight materials, plastics have irreplaceable advantages such as light weight, convenient processing technology, impact and corrosion resistance. High-performance plastics are being used more and more in automotive engineering:
1) Lightweight plastics: The primary reason for the gradual expansion of the application of plastics in automobiles is that they have small density and light weight; the density of general plastics is about 0.9~1.5, and fiber-reinforced plastics does not exceed 2; compared with other metal materials, steel and copper materials, generally have a specific gravity of more than 7~8, and aluminum is 2.7, which makes plastic the first choice for lightweight materials in many fields.
2) Easy to mold and simple process: plastic can be formed easily, and can achieve different shapes and high product accuracy through various processes such as injection molding; at the same time, plastic can be molded in one go, the entire processing process is short, compared to metal parts, usually it is necessary to process each part first, and then connect it through welding and other technologies. The process is complicated, and the plastic parts are more economical;
3) Plastic has different characteristics from metal and can be used as structural materials, and is an ideal alternative material for metal: plastic has the characteristics of elastic deformation , which can be used as a buffer during impact, and plays a protective role for vehicles and passengers. Therefore, plastic materials are currently used for interior instrument panels/steering wheels/center consoles, exterior front and rear bumpers, body decorative strips, etc.; at the same time, plastics also have strong corrosion resistance, so it has been widely used in easily contaminated areas.
plastic can obtain different properties according to different components through different fillers, additives, modification methods, manufacturing processes, etc., to meet the needs of different downstream components.
From the perspective of the proportion of modified plastics for automobiles, modified PP is currently the most widely used sub-category, accounting for 46%. polypropylene can achieve characteristics such as scratch resistance and photothermal aging resistance through modification methods such as toughening/reinforcement/blending. It has been widely used in automotive interior parts and after reinforcement in door modules and tail cover modules; secondly, modified PA (including PA6, PA66, etc.) accounts for about 8%, ranking second. The application of modified PA is the most common, and its strength, product accuracy and dimensional stability after modification have been improved, especially suitable for functional structural parts that have requirements for both accuracy and strength.
We believe that with the continuous improvement of modification technology and processing technology in the future, the application of plastics in automobiles will continue to expand and are expected to extend to more high-function areas.
2.2.1 New energy vehicles have a high prosperity, promoting lightweight demand
0 demand recovery after the epidemic, and the automobile market has great growth potential. From 2007 to 2021, my country's annual passenger car sales increased from 6.3 million to 21.48 million, an increase of 300%+, and now it has firmly ranked first in the world's largest automobile market.
In recent years, due to the weak willingness to consume, the increased difficulty in maintaining a car, and the impact of the new crown epidemic since 2020, my country's automobile sales have declined; in 2021, as the epidemic is gradually brought under control, demand for the automobile industry has begun to recover.
From the perspective of car ownership, my country has 173 vehicles, ranking 17th in the world, only 20% of the United States. Compared with developed countries, my country's future consumer demand space is still very broad.
The new energy vehicle industry is in full swing, with sales exceeding 3.5 million vehicles, and will become the mainstream model in the future.
In recent years, in a period of slightly decline in automobile sales, my country's new energy vehicles are still seeking progress while maintaining steady progress, and sales have continued to rise. In 2021, the sales of 3.52 million vehicles were achieved, with a year-on-year growth rate of up to 157%.
my country has now become the world's largest source of new energy vehicles, and the number of related patent applications is the world's first. We believe that with continuous breakthroughs in technology in the future, the new energy vehicle market will continue to flourish and have huge space.
The proportion of new energy vehicles in 2021 to account for 13.4% of the total sales of passenger cars. According to the target plan of China Automobile Engineering Society , it is planned that its sales will exceed 50% by 2035, and new energy vehicles will become the mainstream model.
New energy vehicles have higher requirements for battery life and weight loss, and urgently need lightweight development.
Mileage anxiety and increased subsidy thresholds promote the development of new energy vehicles to lightweight: in recent years, the subsidy for new energy vehicles has declined, and the endurance threshold of subsidy has continued to rise. New energy vehicles have more urgent needs for the increase in range, and cars can greatly improve the range of new energy vehicles through weight reduction and energy consumption reduction.
According to the data from Journal of Automotive Engineering , for pure electric vehicles, a 10% reduction in vehicle quality can reduce electricity loss by 5.5% while increasing the mileage of 5.5%. Therefore, new energy vehicles will become a key area for future automobile lightweighting.
2.2.2 Plastic parts are gradually penetrating, and the value of bicycles continues to increase
interior applications are mature, and new fields are gradually expanding.
The structure of automobiles can be mainly divided into body, power system/battery package, interior and exterior decoration and chassis, etc., and the materials used are different;
Among them, plastics have been used in automobiles for decades, and are currently mainly used in automotive interior parts, exterior parts and some functional structural parts, among which the application of interior parts is the most mature;
Most models of car bodies and chassis are still mainly based on metal materials, and high-strength steel, thermoforming, aluminum alloy and other materials are used to achieve lightweight replacement, but at present, some trends of plastic instead of steel have begun to appear in the non-skeleton part of the car body;
In addition, in the future, we believe that the larger increase in the application of plastic lies in the three-electric system of new energy vehicles. The demand for battery packs for battery life and energy density has greatly promoted the development of plastic and composite materials in lightweight materials.
Figure 28: Comparison of the structure of traditional cars and new energy vehicles
Figure 29: The main increments of future modified plastics are in the three-electric system, body
At present, plastics have been widely used in automobile interior and exterior decorations and some functional structural parts.
plastic can achieve different performances through modification and other methods. It is convenient to process and is conducive to recycling and regeneration. It has many advantages that metal materials cannot achieve. It has been adopted on a large scale by the automobile industry:
1) Interior parts: dashboard, steering wheel, glove boxes, seats, etc. This type of parts has certain requirements for durability and safety. The main materials are concentrated in PP, PU and other products. At present, the automotive interior parts have basically been plasticized;
2) Exterior parts: bumper , fenders, tail wings, etc., which have requirements for safety and aesthetics of shape. The main materials are modified PP, ABS et al., in recent years, the degree of plasticization of exterior accessories has been continuously improved;
3) Engine functional parts: has developed late, mainly because of the high temperature problem of the engine, which has put forward high requirements for the application of plastic functional parts, and needs to solve the heat resistance/flame retardancy, rigidity and accuracy of plastics. Currently, glass fiber reinforced plastics are mainly used.
We believe that the main increase in the future comes from the three-electric system of new energy vehicles and the application of body structural parts:
1) Three-electric system: Plastics are mainly used for the support and protection of the three-electric system of new energy vehicles.
New energy vehicles have added core three-electric systems (battery, motor, electronic control) than traditional fuel vehicles. Among them, since the entire battery pack can account for 20~30% or even higher of the curb mass of the vehicle, improving the energy density of the battery (electric energy released by the average unit volume or mass of the battery) is the main factor affecting the battery life, which further highlights the importance of the lightweight development of the battery pack.
The three-electric system is the most core, as shown in the figure below. Generally, the battery system is usually composed of structural parts such as battery cells, boxes and trays, among which the mass of the box (external shell + bracket) can account for more than 20%.
Since it takes a long time to improve the energy density of the battery cell, the current lightweight solution for battery systems is mainly focused on changing the materials and design structure used in its box; currently, high-strength steel, aluminum alloys, and composite materials are most widely used in the lightweight of new energy battery pack boxes.
battery pack box mainly plays the role of protecting and supporting the battery module, and each of the three materials has its advantages.
(1) High-strength steel: has high yield strength and tensile strength, resistance to deformation, but has heavier self-weight and poor corrosion resistance;
(2) Aluminum alloy: is widely used as a material used for automotive lightweight, with a density of only 1/3 of steel, and has advantages such as light weight and good plasticity, and has good corrosion resistance, thermal conductivity and heat dissipation;
(3) Composite material (carbon fiber or glass fiber reinforced plastic, etc.) has a density of only 1/4 of steel, with light weight and superior modulus, and has multiple advantages such as deformation and impact resistance.
Take the current mainstream electric models as an example. Most battery boxes are mainly made of high-strength steel, aluminum alloy and other materials, and the upper shells of some models have begun to use composite materials such as SMC. In the future, due to the requirements of battery box materials for electrical insulation, high heat dissipation, stability, etc., engineering plastics are expected to gradually receive attention due to their light weight, good heat resistance, and excellent electrical insulation.
2) Car body:
main frame material is still mainly metal due to safety requirements, and the application trend of plastic on structural parts such as the rear of the car has begun to appear.
body consists of a skeleton, opening and closing parts (4 doors + 2 covers), as well as other structural parts such as fenders, shock absorbers, etc.; the most important performance requirement of the body is to ensure driving safety, so the body currently mainly uses high-strength steel and aluminum-magnesium alloy as lightweight alternatives.
We have sorted out some models exhibited on ECB in the past three years, among which high-strength steel is the most widely used, and most models account for more than 40% of the proportion;
aluminum alloy is a very high-quality lightweight material with low density and light weight, and is characterized by good thermal conductivity and strong corrosion resistance compared to steel. Its application in car bodies has increased year by year in recent years, but if aluminum materials are required to have strength comparable to steel, the process requirements are higher, which increases the process difficulty and cost of aluminum body, so it is currently only used in higher-end models;
plastic in car bodies is currently mainly concentrated on rear door covers, fenders and structural parts. Taking NIO ES6/ES8 models as an example, ES8 uses all-aluminum white body, four-door and front hood, and the back door adopts SMC;
and ES6 are based on this. The rear floor of the car body is made of carbon fiber reinforced plastic, the back door is SMC+ injection molded, and the front-end module is also replaced by ES8's magnesium alloy for injection molding parts;
Currently, the use of plastic composite materials on the body is still in the early stage of development, mainly because plastics must reach a certain strength, which will increase the cost of raw materials, so it is currently in high-end or performance cars. However, we believe that plastics are better than aluminum in process flow, and comprehensive calculations are more economical, and the application on the car body is expected to be further improved in the future.
bicycle usage has increased year by year, and the future automotive modified plastics market has broad room for growth.
According to data from the Forward Research Institute, from 2014 to 2020, the average bicycle usage of modified plastics increased from 123kg/vehicle to 171kg/vehicle.
According to the previous article, we believe that the application of modified plastic in automobiles is expected to be further improved. In addition to internal and external parts and engine functional parts, it is also expected to be applied to the three-electric system of new energy vehicles and some body module structural parts:
1) Battery package: plastic mainly replaces the box material of the battery pack. The above article Model3 is an example. The weight of the upper shell/lower shell is 15.8/29.5kg respectively. At present, the trend of plastic replacing steel and aluminum replacing on the upper case cover is more obvious. Since the lower case and the bottom plate need to play a supporting role, the material requirements are higher and the replacement is slower;
2) Body structural parts: We refer to the situation where NIO uses plastic on the body. The weight of the body of NIO ES6/ES8 are respectively 428kg/439.5kg, plastic accounts for 7.4%/4.7% respectively, corresponding to 31.7 kg/20.6kg. We believe that composite materials are expected to be more used on the body in the future.
In summary, we believe that the use of plastic in automobiles will increase year by year in the future. According to data from the Forward Industry Research Institute, it is expected that the use of modified plastic bicycles will increase to 210kg/vehicle in 2026. In the long run, as plastic parts continue to penetrate, we believe that the use of bicycles is expected to exceed 250kg/vehicle.
According to calculations, the market demand for automotive modified plastics in 2020 will be 4.21 million tons. In the future, with the continuous improvement of modification technology, the application of modified plastics in the automobile industry will continue to expand, and the total demand for automotive modified plastics is expected to reach nearly 6 million tons.
The company's raw material procurement price changes smoothly, and the prices of non-standard modified particles are mainly determined by the supply and demand pattern.
The upstream industries of automobile parts are mainly plastics and steel industries, and the downstream connects vehicle manufacturers or suppliers. Among them, plastic particles have a variety of subdivided varieties, and the prices of plastic particles of different quality and types vary greatly. The prices of ordinary plastic particles fluctuate due to the influence of macroeconomics and crude oil markets. However, the non-standardization of modified plastics, and the supply and demand structure is the main factor affecting prices.
's main raw materials for automotive plastic parts are modified plastic particles (PP, PC, TPE, PA66, etc.), and their procurement changes are relatively small. The procurement price from 2019 to 2021 remained at 25,000 to 25,000 yuan/ton, and rose slightly in 2021.
The automotive parts industry can be divided into internal and external decoration parts or functional structural parts, and there are many players in the industry who have their own business.
The automotive industry is one of the largest applications of injection molded parts. According to the purpose, it mainly focuses on internal and external decorations that focus on comfort and beauty and functional structural parts that focus on durability and stability. The product application range is relatively wide.
At present, among the listed companies in the industry, the automotive parts industry is mainly composed of Xinquan Co., Ltd., Daimei Co., Ltd., Xusheng Co., Ltd., Zhaomin Technology, Weike Technology, Junchuang Technology and other companies. Their business scale, customer resources, core technology and other indicators are different. There has not yet formed a dominant competitive landscape in the industry. They basically have business areas of focus, and downstream customers are also different.
functional structural parts have wide growth space and high added technology, and companies in related businesses are expected to benefit. We compare the profitability of comparable companies in the industry;
1) Revenue scale: internal and external accessories market is becoming more mature, and the structural parts market opportunities are unprecedented. Although Daimei Co., Ltd. and Xinquan Co., Ltd. have a larger revenue scale (the average annual revenue exceeds 4 billion yuan in 2021), the smaller Junchuang Technology and Xusheng Co., Ltd. have included precision functional structural parts, especially the production of new energy vehicles-related functional parts, and their business growth rate is better. The revenue growth rate in 2021 will reach 93%/86% respectively;
2) Gross profit margin: functional structural parts have higher requirements for precision and deformation resistance, and their production process and technical difficulty are relatively higher, requiring products to maintain consistency and stability, and have high added technology.
Therefore, the gross profit margins of Junchuang Technology, Zhaomin Technology and Weike Technology, which mainly produce high value-added functional structural parts, are relatively close to each other, and are higher than Xinquan Co., Ltd. and Daimei Co., Ltd.(One of the relatively low in Junchuang in 2021 is due to multiple factors, please refer to the previous article)
Figure 36: The growth of the functional structural parts business company is better
Figure 37: The product technology added value of the functional structural parts business company is higher
serves the industry's leading customer base, and T Company has risen to the largest customer.
company has been deeply involved in the automotive parts market. With its integrated business model and high-quality product performance, it has gradually gained recognition from leading domestic and global automotive parts suppliers and vehicle manufacturers, and has reached a stable cooperative relationship for many years.
Company has carried out long-term cooperation with international parts giants such as SKF and Antonglin, T Company, Ford, Jaguar Land Rover and other European and American brands, Japanese brands and domestic independent brands through direct and indirect cooperation.
Among them, the proportion of sales to T Company has increased year by year, and it has now become the company's largest customer, with sales exceeding 100 million yuan in 2021.
T The company's business development injects growth momentum into performance, and expands the application scenarios of the company's new energy vehicle functional components.
The company's main customers include global bearing giant SKF, and Antonglin, the world's top 100 auto parts company, etc., and has reached long-term cooperative relationships with customers as secondary suppliers.
In addition, the company has become a first-tier supplier of T Company in recent years and cooperated with T Company’s first-tier suppliers, Heshuo United and Quanda Group.
T As the world's leading new energy vehicle manufacturer, the company's performance has been rising year by year, and the demand for new energy vehicle functional parts is growing under the background of "plastic instead of steel".
We believe that the cooperation with T company will greatly help the company's new energy parts sector sales growth, and the high-quality customer resources will give the company a first-mover advantage and a head effect in the future competition of similar suppliers.
T The company is a world-leading new energy vehicle manufacturer, with a delivery volume of nearly one million units and a growth potential remains unabated.
From 2018 to 2021, T's global electric vehicle production increased from 255,000 units to 930,000 units, with a CAGR of 54%, and a delivery volume increased from 245,000 units to 936,000 units, with a CAGR of 56%. Since the Model 3 was launched in the second half of 2017 and the Model Y began delivery in 2020, the company's production and sales volume has achieved rapid growth.
In the first half of 2022, T company produced 564,000 units worldwide and delivered 565,000 units, an increase of 45.8%/46.3% over the same period last year.
In the first half of the year, under the influence of multiple factors such as semiconductor supply chain shortages and factory shutdowns, production and sales still achieved excellent year-on-year growth, and the monthly output in June hit a record high. We believe that external adverse factors eased in the second half of the year and are expected to maintain rapid growth throughout the year.
Figure 40: T Company's automobile production increased significantly from 2018 to 2021
Figure 41: T Company's sales growth is driven by Model3/Y
T The company has production factories in the United States, China and Europe, and the delivery volume is expected to maintain rapid growth in the future.
T Company currently has production plants in California, USA and Shanghai, China, with a total production capacity of about 1 million vehicles/year. When the Chinese factory was put into production in 2018, the designed production capacity was about 500,000 vehicles/year. At the end of 2021, T announced that it would optimize the production line of its Shanghai factory. In August this year, the company raised the production capacity of Shanghai factory to 750,000 vehicles/year. The total production capacity this year is expected to be nearly one million vehicles, and it is expected to be further expanded in the future;
Germany's Berlin Super Factory and the Texas Super Factory in the United States were announced to be put into production from March to April this year. The Berlin factory is mainly the production of ModelY, with an estimated annual production capacity of 500,000 vehicles. The Texas factory is mainly ModelY and Cybertruck In production, the annual production capacity of a single vehicle model is 500,000 vehicles, and 1 million vehicles/year is added.
If the existing planned capacity climbs smoothly from 2024, T Company's production capacity will exceed 3 million vehicles/year, and the CAGR from 2021 to 2024 will exceed 50%.
Company has long-term cooperation with leading car companies and suppliers, and has the ability to provide integrated solutions. In the future, with the increase in the number of delivery of large customers, coupled with the company's plastic parts penetration rate , it is expected to drive rapid growth in performance.
From 2019 to 2021, the company's sales to T Company increased from 5.33 million yuan to 108 million yuan, accounting for from 3% to 31%, and the sales of new energy functional parts achieved rapid growth.
Currently, the four models T company is produced by procurement company , which are widely used for the protection and support components of the three-electric system; the company has strong R&D and innovation capabilities, and has formed a deep technical accumulation through long-term service to leading customers in the industry, and has the ability to provide customers with integrated product solutions. It can continuously expand application scenarios based on existing products supplied.
We believe that on the one hand, we will benefit from the rapid growth of T's own production capacity and delivery quantity. On the other hand, the company's plastic parts continue to penetrate into the body application, which will lead the company into a period of rapid growth.
The company focuses on product technology research and development, and continuously optimizes product performance to respond to customer needs.
is oriented towards customer needs and constantly develops new products and technologies. It currently masters a variety of independently developed patented technologies such as "two-color molding technology", "high-gloss paint-free molding technology", and "ultra-high-precision plastic molding technology", and has been put into mass production; the automotive parts industry is an industry with rapid product iteration and demand changes, which requires the company to continue to maintain sensitivity and continuously launch new products and new technologies to meet the diverse needs of customers.
The application of the company's core technology can provide customers with lower cost, higher manufacturing efficiency, and guarantee stability and consistency, and gain recognition from downstream major customers.
High R&D investment ensures core competitive advantages, and new projects continue to improve delivery efficiency and product stability.
From 2018 to 2021, the company's R&D expenses continued to grow, from 7.99 million yuan to 10.98 million yuan. The proportion of R&D expenses in 2021 declined, mainly due to the company's sharp increase in operating income in the same year.
Among comparable companies in the industry, the company's R&D expense ratio has always maintained a leading position in the industry (except in 2021), which provides effective support for the company to continue to develop new products and optimize process efficiency.
At the same time, based on the existing technical level, the company further expands technological research and development. As of now, the company has 6 projects under development, most of which have reached pilot stages. After the project is completed in the future, it will better optimize the production process, improve delivery efficiency, and maintain the stability of product output, which will help the company better serve customers.
fundraising and investment projects expand production capacity and ensure the supply capacity to high-quality customers.
The funds raised by the company will be mainly used for the technical transformation project of automobile parts expansion and transformation. It plans to use existing reserved sites to increase advanced equipment to ensure sufficient product supply for existing large customers, and at the same time reserve the possibility of developing other potential customers. After the
project is put into production, it is expected that the production capacity of 4 million pieces, 5.5 million pieces and 19.5 million pieces will be added respectively.
in-hand orders can digest the proposed new production capacity, and the project expansion provides guarantees for potential customers' expansion and high performance growth.
fundraising and investment projects plan to add 29 million new production capacity, and all of them are expected to add 188 million new output value after they are put into production.
According to the announcement, as of the beginning of 2022, the company's on-hand order volume was saturated and it is expected to digest the new production capacity of the project. At the same time, the company developed new customer resources for internationally renowned car dealers such as Jabil, Lear, and Aijiem in 2021, and is expected to expand the supply system for more customers in the future. We expect the company's order volume to continue to remain saturated and drive performance growth.
Production capacity assumption: In 2021, the company has a production capacity of 4788/973/103800 hours; at the same time, in the field of automotive plastic parts, according to calculations, the company's sunroof control panel/suspension bearing/new energy vehicle functional parts series have achieved sales of 1824/2761/20.98 million pieces respectively. The company's fundraising project [Auto Parts Expansion Technology Transformation Project] plans to add 400/550/19.5 million pieces respectively.
Among them, the sunroof control panel/suspension bearing series is assumed to be gradually put into production in 2 years. Due to the rapid growth of new energy vehicles in recent years and the continuous penetration of plastic parts in the automotive field, this business segment has sufficient orders in hand.
Due to the relatively simple injection molding process, the equipment can be quickly installed and expanded production capacity when there is an existing factory.
Revenue Assumption: 's company's business mainly focuses on automotive plastic parts, and its revenue has accounted for 80~85% in the past three years. The molds and some automotive metal parts are mainly to meet customer customized supporting needs. Therefore, in the revenue forecast, we only dismantle the plastic parts sector, and we assume that there is little change in the rest of the sectors.
1) New energy vehicle functional components: 's main customer is T Company. In recent years, the company's business in this sector has achieved explosive growth, achieving a compound growth rate of over 400% from 2019 to 2021.
As mentioned above, the injection molded parts business is less affected by capacity limitations. It is mainly determined based on downstream demand and orders. If the orders are sufficient, the production capacity can be quickly expanded by leasing the factory and purchasing equipment.
We expect T Company's production to be 1.50/240/3.3 million vehicles from 2022 to 2024 (see the previous article). Assuming that the company's penetration rate of models and its value in bicycles continue to increase, we expect new energy vehicle functional parts to achieve revenue of 332/551/832 million yuan from 2022 to 2024;
2) Automobile sunroof control panel: 's main customers are Antonglin, the world's leading automotive parts company, and the downstream car clothing is mainly traditional passenger models. We assume that from 2022 to 2024, the business of this sector achieved sales of 2024/2224/22.24 million pieces, and the unit price decreased by 2.20/2.09/1.99 yuan/piece year by year; from 2022 to 2024, the revenue was 0.45/0.47/0.44 million yuan;
3) Automobile suspension bearings: 's main customers are SKF, the world's leading suspension bearing company, which mainly supplies upper and lower covers and protective frames.
We assume that from 2022 to 2024, the sales volume of this sector's business will be 3061/3311/33.11 million pieces, and the unit price will decline by 2.14/2.03/1.93 yuan/piece year by year; from 2022 to 2024, the revenue will be 0.65/0.67/0.64 million yuan;
Cost and gross profit margin: In recent years, the company's gross profit margin has shown a downward trend, and some factors have been alleviated.
decline is mainly due to:
1) Raw material prices fluctuate. Since the second half of 2020, due to the influence of international crude oil prices and macroeconomic factors, upstream plastic particles prices have risen sharply. The raw materials used by the company are usually modified plastics or engineering plastics, which are relatively small, but the purchase price also showed an upward trend in 2021; starting from the second half of this year, the prices of bulk raw materials have fallen to varying degrees, which is expected to have a positive impact on the company's profitability;
2) Product structure changes: The company's new energy functional parts business grew significantly in 2021, and the gross profit margin of this sector's business was relatively low;
3) The metal business entered the trial production stage, and the large depreciation of fixed assets was amortized before the business was scaled, resulting in a low gross profit margin of this sector, and the first half of this year has shown a rebound trend.
To sum up, we expect the company's gross profit margin this year is expected to be repaired compared with 2021, but in the future, due to product structure, the gross profit margin of new energy business is relatively low. As the proportion increases, the company's gross profit will drop slightly.
In summary, we expect the company to achieve operating income of 499/722/997 million yuan in 2022-2024, with a CAGR of 42% in 2021-2024; and a net profit attributable to shareholders of 5353/7674/105.83 million yuan in 2021-2024, with a CAGR of 56%.
valuation We adopt comparable company
PE valuation method: company's main business is the production and research and development of automotive plastic parts, and its business is pure. Comparable companies We select Xinquan Co., Ltd., Daimei Co., Ltd. and Xusheng Co., Ltd., which are similar to the company's business, and are all engaged in the production and research and development of automotive plastics and metal parts. For comparison, please refer to the previous article.
The average PE of comparable companies in 2022 is 35 times. Considering that the company's fundamentals and the liquidity in the market are both called Shanghai and Shenzhen, the business volume is small, and the risk resistance is weak, a certain fundamental valuation discount is given. The liquidity of the Beijing Stock Exchange where the company is located is weaker than that in Shanghai and Shenzhen, and a certain liquidity valuation discount is given, we give the company 25 times PE.
We expect the company to achieve a net profit of 53.53 million yuan (YOY+91%) in 2022, corresponding to a reasonable valuation of 1.3 billion yuan. As of October 12, 2022, the company's market value was RMB 910 million, and we expect there is still room for 47% growth.
1) Big customer binding: T The company is the main customer of the company's new energy vehicle functional parts sector and is also the main driving factor for the company's performance growth in recent years. If it is affected by macro reasons, customer's own capacity expansion and delivery not meeting expectations, it may cause the company's orders to fall below expectations and affect the company's performance.
2) Different lightweight materials and processes cause intensification of competition: has many lightweight materials, and new technologies and materials are emerging one after another. The choice of lightweight materials between different parts of different brands of car models is different. If the emergence of new products and new processes leads to an intensified competitive environment, it may have an adverse impact on the company's operations.
3) Raw material price fluctuations: company's upstream raw materials are mainly modified plastics and engineering plastics, and their prices will also be affected by the rise and fall of upstream bulk raw materials. If the prices of raw materials continue to fluctuate significantly in the future, it will have an adverse impact on the company's operations.
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Selected report from [Fuanzhan Think Tank]
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