Qiangrui Technology (301128)
The company is a small leader in the subdivided industry focusing on the field of metallurgical tools in China for a long time: the company was established in 2005, mainly engaged in the R & D, design, production and sales of fixtures and equipment for tooling and testing, and is committed to providing customers with fixtures and equipment products to realize automatic production and improve production efficiency and yield. Fixture and equipment are the two major categories of the company's products. Comparatively speaking, fixture is the leading product of the company. From 2018 to the first half of 2021, the revenue of the company's fixture products accounted for about 61%; At this stage, the downstream application of the company's products is mainly the electronic production of mobile terminals. The application scope covers most processes in the front and rear manufacturing of smart phones, and the product line is relatively rich. The competitive advantages of the company's products are mainly reflected in the aspects of "rapid response, high customization, deep understanding of customer product needs, small batch, multiple types, multiple batches and short delivery period". From the perspective of the cooperation between the company and its core customer Huawei, the company has occupied an obvious competitive leading advantage in the field of mobile terminal tools and equipment segmentation; In 2018-2020, the share of orders delivered by the company to China for terminals ranked first in the procurement of similar products.
Relying on the rapid development of downstream and the high iteration attribute, the company's industry is small but contains great potential: fixture products have significant customization and non standardization characteristics, and must be strictly adapted to the shape and size of workpieces; At present, the company's products are mainly used in the field of mobile terminal electronic products dominated by smart phones; Benefiting from the large market scale base and rapid renewal speed of consumer electronic products such as downstream smart phones, the metallurgical industry still contains large market development space and development potential although the individual value is limited. At the same time, in addition to smart phones, with the popularization of 5g communication and the development of new technology applications such as artificial intelligence and meta universe, the intelligent wearable industry and intelligent automobile industry are entering a rapid development stage, and it is expected to open up new growth space for automatic tools and equipment applications.
Huawei's single customer risk has been significantly released, and its performance has gradually returned to soundness: 1) before 2020, the company's business has obviously relied on major customer Huawei. Since the fourth quarter of 2020, Huawei has been affected by force majeure reasons such as U.S. sanctions. From 2020q4 to 2021, the orders obtained from Huawei fell sharply, which also dragged down the company's performance. According to the revenue data of the reporting period, most of the company's revenue in 2018 and 2019 came from the smartphone business of Huawei terminals. From 18 to 19, the company's sales to Huawei, the largest customer, accounted for 82.65% and 87.25% respectively; In 2020, even if Huawei's global shipments of smart phones fell due to US sanctions, the company's sales to Huawei still accounted for 54.72% in the current period. 2) By 2021, the company's business has largely absorbed the impact of Huawei's order stall; In the first half of 2021, the proportion of the company's sales to major customers Huawei has decreased to 18.35%, and the business dependence has been significantly reduced. By dismantling Huawei's orders, we tend to believe that the impact of Huawei's order stall is expected to be significantly digested: on the one hand, from 2020 to 2021h1, the proportion of Huawei's network communication business orders that are relatively unaffected by U.S. sanctions has increased rapidly. By the first half of 2021, the proportion of network communication business order revenue has reached 39.14%, The probability of subsequent Huawei orders remaining stable on the basis of 2021 has increased significantly; On the other hand, glory was stripped from Huawei's system, and the smartphone business was gradually normalized. It returned to the top five smartphone sales in China in 2021. With the good cooperation foundation between the company and the glory brand in Huawei's system in the past, the company's orders for glory are expected to recover.
The expansion of Apple industrial chain is getting better and better, and the company is expected to set sail again: 1) expand Apple industrial chain with qiangrui equipment as the main body, and enter the country smoothly; In January 2019, the company cooperated to establish qiangrui equipment; In November 2019, the company acquired the remaining 57% equity of qiangrui equipment at the price of RMB 100 million. Taking Apple industrial chain company as a whole, the company's sales revenue to Apple industrial chain customers in 2020 was about 144 million yuan, accounting for 34.60%; In the first half of 2021, the proportion of the company's sales to Apple industrial chain companies increased to 55.79%. Among them, Foxconn of Apple industrial chain has replaced Huawei as the company's largest customer, and the proportion of sales revenue in the current period in the company's total revenue reached 26.45%. 2) At the initial stage of listing, the apple industry chain was added again, and the speed of development can be expected. After only two months after listing, the company issued an asset purchase announcement. It plans to use the over raised funds totaling 40.5 million yuan to invest in Kunshan furuiming and obtain 51% equity of Kunshan furuiming; This acquisition is a horizontal acquisition of the company. By integrating the technology and customer resources between the company and Kunshan furuiming, the company can directly increase the supply amount of the company to Luxshare Precision Industry Co.Ltd(002475) in the apple industrial chain, and further consolidate the company's position in the apple supply chain system.
Investment suggestion: Huawei, as the company's largest single customer in the past, is expected to have been significantly digested in 2021 due to the sharp decline in orders caused by force majeure such as US sanctions; At the same time, from 2020 to 2021, the company's apple industry chain customer expansion is also getting better, and the cooperation with Foxconn, Luxshare Precision Industry Co.Ltd(002475) and other major apple industry chain manufacturers is also gradually deepening. We tend to think that the company is expected to go through the trough and enter a new growth stage in 2022. In particular, with the launch of a new round of technology cycle represented by 5g and the gradual marginal improvement of the global chip shortage, smartphone consumption may continue to rebound in 2022, and the development of smart wearable and smart car industry will also enter a fast cycle, It is expected to further increase the demand and innovation iteration frequency of basic consumable parts of automation equipment such as metallurgical tools and small processing and testing instruments, and create a more favorable development environment for the company. At present, compared with companies in the same industry, the market value of the company is relatively small, the pe-ttm valuation is in the middle of the industry, and the product line and customer line are also in the stage of rapid expansion; Considering the expected changes in the company's performance and the possible development opportunities brought by the development of new customers and new businesses, we suggest paying attention to the possible investment opportunities of qiangrui technology in 2022 and covering the company for the first time.
Risk tips: the risk of concentration in downstream industries, market competition, seasonal fluctuations in orders and income, the impact of covid-19 epidemic, the risk of rising labor costs, etc.
