Fengguang precision (430510)
The subdivided field is “small and beautiful” company, which has been deeply cultivated in the industry for 20 years. It is a high-end manufacturing core component with strong R & D attribute: the company takes precision machining and die-casting manufacturing as the core, and its downstream customers are semiconductor, industrial automation, high-speed train / Rail Transit, automobile and other industries, of which semiconductor and industrial automation account for about 60%. In recent years, the income scale has increased steadily. The performance forecast of the annual report in 2021 shows that the net profit is about 48 million yuan ~ 51 million yuan, an increase of 43.62% ~ 52.60%. The performance in the first three quarters of 2021 increased significantly, realizing an operating revenue of 195 million yuan (+ 48.7%) and a net profit attributable to the parent company of 39.75 million yuan (+ 59.7%). The gross profit margin and net profit margin of the company showed an upward trend, which were 37.39% / 20.42% respectively. In the early stage, the capacity utilization rate of the company’s industrial automation production line and semiconductor production line is close to saturation. With the completion of the raised investment project, it is expected that the industrial automation expansion project will increase the design capacity by 8.04 million and the semiconductor expansion project will increase the design capacity by 2 million. In recent years, the company’s net profit margin has been continuously improved, reaching 20.4% in the first three quarters of 2021, maintaining a leading position.
Customers are major well-known manufacturers in the field of semiconductors and automation. Newly signed contracts increase future certainty. Harmonic reducer products may become a focus: the company attaches great importance to technology R & D investment and maintains the R & D cost rate at about 5-6%. The processing accuracy, surface quality and stability of products are outstanding. At present, the company reserves high-quality projects in four major fields, and its main customers include THK, Yaskawa electric, ediworth, FESTO, Shanyang electric, gates group, Crrc Corporation Limited(601766) , Alstom, Junsheng, Nippon power, Dayco and atlas. The harmonic reducer developed by the company is in the stage of small batch trial production and process improvement. Its reduction ratio, output speed, rotation accuracy, idle distance, back clearance, transmission efficiency and average life have reached the same level compared with foreign brand products. At the same time, the company disclosed that on December 28, 2021, it signed the master agreement on Strategic Cooperative procurement of core components of semiconductor vacuum pump and the exclusive supply contract with ediworth (Qingdao) for a period of ten years.
Under the intelligent manufacturing strategy, industrial automation equipment has ushered in new opportunities, driving the release of demand for precision machined parts and components: the four fields of automobile, industrial automation, semiconductor and rail transit have made concerted efforts to expand the localization market of core precision parts. With the rapid development of downstream and terminal application industries, the continuous expansion of market scale and the acceleration of the optimization and upgrading of original production capacity, China’s industrial automation equipment industry will usher in good development opportunities and drive the further growth of the demand for relevant precision machining parts and components. At present, the industry concentration is not high, and China has not yet formed an absolute leading enterprise in the precision metal manufacturing industry. With the improvement of downstream customers’ requirements for manufacturing technology and R & D level, the large professional precision parts manufacturers represented by the company have obvious competitive advantages in customer stickiness, and the market share is expected to increase.
Investment suggestion: overweight – a investment rating, 6-month target price of 20 yuan. We expect that the company’s revenue from 2021 to 2023 will be 280 / 391 / 466 million yuan respectively, with a year-on-year increase of 52.5% / 39.8% / 19.3%, and the net profit attributable to the parent company will be 4966 / 7921 / 95.77 million yuan respectively, with a year-on-year increase of 48.6% / 59.5% / 20.9%. In terms of valuation, the P / E ratios of the company from 2020 to 2022 are 72.68/48.91/30.67x respectively.
Risk tip: the project’s capacity release and capacity utilization are less than expected, the downstream demand is less than expected, the price of raw materials fluctuates sharply, and the assumption is less than expected
