Speaking of industrial automation, China's number one industrial control frequency conversion and servo system Huichuan technology is naturally everyone's thumbs up.
was born from Huawei , challenging international strong enemies and benefiting from the explosion of high-rise elevator houses in China. Huichuan , which has both internal and external development, has seen rapid growth in recent years, and its stock price has also soared rapidly.
A solid industrial foundation is the most solid foundation of a strong country. Whether it is the United States, Germany or Japan, these richest countries are supported by screws and wires.
Three years ago, the State Council released "Made in China 2025". We have seen the subsequent industrial upgrading boom. The busy semiconductor, new energy vehicles, and industrial robot industries have played the strongest sound for China to move towards an industrial power.
In many sub-sectors that we cannot see, some excellent stealth champion companies rely on focus and fine polishing, and more and more emerge.
Today's protagonist, Xinjie Electrical (603416.SH), is the first in the domestic field of industrial automation.
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In December 2016, Xinjie successfully launched an IPO, raising a total of 405 million yuan, mainly for the expansion of PLCh, servo systems and intelligent devices.
PLC, full name " programmable controller ", has always been the company's core product, and its proportion of main business has remained between 46% and 50% in the past years.
So, what is PLC?
Let’s know by making an analogy - PLC is the CPU in the field of industrial automation.
To be precise, a programmable controller (PLC) is a computer dedicated to industrial control. It uses programmable memory to store instructions, execute functions such as logic, sequence, timing, calculation, etc., and control various mechanical or production processes through analog or digital I/O components.
For example, the clothes we wear are now left to machines to sew. So how do you weave thread and sew the edges? It's all the PLCs in the machine that have the final say.
PLC is the most important part of automated production. The composition of the automated production assembly line we often talk about can refer to the following figure:
Did you see it? At the control system level, the most important thing is the PLC controller.
If the automation industry is divided into several different levels, then PLC is standing at the top position of the pyramid.
Huichuan technology has a prominent position in the field of automation, but Huichuan's main products are still the driving layer and execution layer.
, Xinjie Electric's main products belong to the control layer. First, it has formed a differentiated competition with Huichuan, and second, it is easier to penetrate downward than upgrade upward.
After more than ten years of careful cultivation, Xinjie Electric has become the first in the local industry and fifth in the entire market in the field of small PLC.
is ahead of him, namely Siemens , Mitsubishi , Omron and Delta. Behind him, there are also Panasonic , Schneider , Keenx, and the multinational giants of Yishui.
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Industrial automation industries are usually divided into two types: PA (Process Automation, Process Automation) and FA (Factory Automation, Factory Automation).
PA is generally targeted at project-oriented markets, such as automobiles, petroleum, chemicals, and power industries. It is huge in size and is the place where large and medium-sized PLCs are used.
FA is generally targeted at the OEM market, usually purchased by small and medium-sized enterprises, and configurable it in the equipment produced by itself. It is flexible and changeable, and has a wide range of application fields.
Xinjie mainly does FA. The industries with more than 5% of downstream customers are textiles, packaging and food and beverages, and their market size has always been very stable.
In addition, with the rapid development of semiconductors, lithium batteries, industrial machine tools, medical devices and other industries, more and more local companies hope to obtain opportunities for domestic replacement of PLCs, and the market is heating up.
Look at the current domestic production rate of industrial automation systems, and you will find many interesting things.
For example, the domestic production rate of industrial control machines is the highest, above 90%, almost completely self-sufficiency;
is followed by temperature, high voltage inverters, water quality analyzers, switching power supplies and other fields. Generally speaking, the higher the domestic production rate, the lower the technical threshold of the industry and is easy to be overcome by local enterprises;
has the lowest domestic production rate, which is PLC, which is only less than 10%, which also means that this is the link with the highest technical threshold in the field of industrial automation.
In this field, Xinjie's share has reached 5%, which means that this company has taken over half of its local share.
China's economic and industrial upgrading, gnawing on one field after another is like gnawing on sugarcane. The sweeter the taste is at the end.
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Domestic substitution is a big opportunity for the industry, but to seize this opportunity, the key is to have strong enough competitiveness in the company itself.
For PLC, stability is the most important indicator. It can generally be evaluated from the two aspects of program execution error rate and IO point stability, where IO points are used to connect the end execution structures such as cylinders and motors.
There has been a report on the market that Xinjie's product error rate is extremely low. During the production process, 60 Xinjie PLCs were used to operate continuously for two years, running at about 100 action times a day. No problems were found in the IO point and the stability was excellent.
compares Mitsubishi and Delta products with the same performance. The price of Xinjie products is about 25%-35% cheaper, and the cost-effectiveness advantage is prominent.
In addition to PLC, Xinjie's products also include human-computer interface , drive system and intelligent devices. The total revenue ratio of the three exceeds 50%, which is also a very important business of Xinjie.
Think about it, Xinjie's products are mainly sold to small and medium-sized enterprises. Small enterprises often lack experience when building their own production lines and require all-round support from upstream enterprises.
Therefore, PLC+human-machine interface+transmission products ( inverter )+controller (servo, stepping)+machine vision+robot arms are already standard for many OEM machinery.
Xinjie develops human-computer interfaces, drive systems, and intelligent devices around PLC, with the purpose of being able to match small and medium-sized enterprises in one-stop form.
is trustworthy, fast and considerate, and Xinjie has done it.
But then again, in the field of servo systems, Huichuan is still the boss after all, and Xinjie adopts a follow-up strategy, with the main purpose being to build a complete product line.
There is still a long way to go to surpass Huichuan in the servo system.
It can also be seen from Xinjie's main business gross profit margin that the main product PLC has a gross profit margin of up to more than 55%, while the gross profit margin of human-computer interface and drive system is much lower.
Xinjie experienced a decline in gross profit margin in 2014 because the company lowered prices in order to cope with market competition. Fortunately, the gross profit margin rebounded later, indicating that the price war has come to an end.
In addition, the company has a small business, intelligent devices, mainly referring to intelligent equipment controllers, visual guide punch loading machines, visual inspection devices and robots.
This small business is mainly based on order production, with a small quantity, but the independent rate is very high. In addition to reducers, the servo systems and controllers required are all developed and produced by themselves, so the gross profit margin is also very high and the potential is good.
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In 2016, the OEM market share accounted for 67% of the entire PLC market, of which the OEM market share of small PLCs accounted for more than 90%. What is behind this is the development of many small and medium-sized enterprises.
In fact, private enterprises and small and medium-sized enterprises are the key to judging whether a country's economy is dynamic and whether it can grow rapidly in the long run.
Small and medium-sized enterprises have flexible production lines and a wide variety of products, which requires upstream to provide a complete production equipment.
Based on this downstream feature, Xinjie has launched the most diverse small PLC products on the market, even more complete than multinational companies.
requires good quality and many product models, so R&D investment is essential.
Depending on Xinjie's R&D, R&D accounts for more than 7% of revenue in recent years, and the total R&D expenditure is constantly increasing. Of course, this is still a big gap with the proportion of R&D expenditure of the eldest brother Huichuan, which is more than 10% of the year-round R&D expenditure. Comrades still need to work hard!
Also worth mentioning is that Xinjie's debt-to-asset ratio has always been very low, the latest third-quarter report data is only 13%, and bank loans are zero.
This shows that the company can ensure sufficient cash flow through its own daily operations, and the funds can be said to be very abundant.
is really good if the cash flow is good. Whether the company relies on endogenous investment or external asset acquisition in the future, only if there is enough cash, can we have a clear mind.
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For secondary new stocks that have been listed for a period of time, investors are also concerned about one issue: Is this stock going to be lifted? Will we become the takeover of the company's old shareholders?
For Xinjie, there is no need to worry about it now. On the contrary, it is better than many companies.
Xinjie's actual controller Li Xin promised during the company's IPO that the lock-up period of his shares was 60 months (at least 36 months for statutory purposes) and the lock-up period for other shareholders was 36 months (at least 12 months for statutory purposes).
From this point, we can see that the company's management does not play with false things and believes in its own company, so they dare to take stocks for a long time. This is how trust between people is established.
Look at the shareholder situation again. When the company goes public, it is all natural person shareholders. There is no risk fund waiting for the lifting of the ban and is eager to cash out. This is conducive to our investors to eliminate distracting thoughts and concentrate on studying the company's fundamentals.
Li Xin once sighed in an interview that since he started his business, the deepest feeling is that he must have quality.
Indeed, the industrial automation market has always been a gathering of experts. With international brands on the mountain, domestic stars at the foot of the mountain are rising, and their quality cannot keep up. Even if they are very popular, it will be difficult to last.
Xinjie has now reached the top of domestic small PLCs. In 2017, it also launched the XG series and officially entered the mid-sized PLC market.
There are people outside the people, and there are mountains outside the mountains. If you want to cross many international peaks, Xinjie still needs to make great efforts, but there is no doubt that Xinjie has been on the road of struggle.
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Author: Junlin Team. Welcome to follow the WeChat public account: Junlin [junlin_1980], more industry interpretations and securities analysis are on the first platform of securities analysis - Junlin
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