\u3000\u3000 Zhuzhou Crrc Times Electric Co.Ltd(688187) (688187)
The company is a leading enterprise in China’s rail transit equipment, with a complete industrial layout from components to complete machines. As an enterprise under CRRC group, the company has strong strength in R & D, design and manufacturing of rail transit equipment. Relying on the strong basic disk in the field of rail transit equipment and the advantages of complete downstream industrial layout, the company has gradually expanded its business to emerging fields such as power semiconductor devices, industrial converter products, electric drive system of new energy vehicles, sensor parts, marine engineering equipment and so on. At present, rail transit equipment is the main source of the company’s revenue, accounting for nearly 87% in 2020. Due to the impact of the epidemic and other factors, the demand for rail transit related equipment is sluggish, and the company’s overall revenue has declined, but the overall gross profit margin remains high, and emerging businesses such as power semiconductors still achieve rapid growth.
The company’s Beijing Emerging Eastern Aviation Equipment Co.Ltd(002933) business layout has highlighted the effect, and the application space of IGBT (insulated gate bipolar transistor) has been opened. Power semiconductor business is an important part of the company’s emerging industry layout. At present, we have fully mastered the complete set of technologies of thyristor, rectifier, IGCT, IGBT, SiC devices and power components, which are applied in many fields such as power transmission and distribution, rail transit and industry. Among them, IGBT is widely used in the field of power electronics because of its low driving power and low saturation voltage drop. However, on the track of IGBT, Chinese enterprises started relatively late, and the market is mostly controlled by Infineon, Fuji, Mitsubishi and other manufacturers. In recent years, Chinese manufacturers, including companies, have been catching up. The company took the lead in making a breakthrough in the field of rail transit high-voltage IGBT, and is now expanding to new energy vehicles, new energy and other fields. Its technology is gradually close to that of international manufacturers, and the advantage of its IDM mode in the competition is also prominent.
From the perspective of trend, new energy vehicles and photovoltaic wind power will drive the growth of power semiconductors such as IGBT. Power semiconductors are widely used in new energy vehicles. High voltage circuits are widely used in new energy vehicles. When the battery outputs high voltage, a large number of conversion processes such as voltage conversion, inversion and rectification are required, and the demand for power semiconductors increases significantly. At present, automobile has become the largest application field of IGBT, accounting for 30%. In the future, with the rapid improvement of the penetration rate of new energy vehicles, the company’s power semiconductor business will achieve rapid growth. At present, the 8-inch vehicle gauge IGBT production line under construction by the company is progressing smoothly, with a design wafer capacity of 240000 pieces / year, and the full production is expected to meet the IGBT module demand of 2.4 million new energy vehicles (single motor). In addition, with the continuous promotion of investment in photovoltaic, offshore wind power and other fields, the application of IGBT will also increase, and the company will fully benefit.
Investment suggestion: as a leading enterprise in the field of rail transit equipment in China, the company has a relatively leading market position in supporting rail transit equipment. In recent years, the company has achieved remarkable expansion results in emerging fields such as power semiconductors. Relying on its existing technology accumulation in the high-voltage field, the company is complying with the needs of the market, expanding its product coverage market to industries, new energy vehicles, wind power photovoltaic and other fields, and the effect is beginning to appear. At the same time, as one of the few IDM enterprises in China, IGBT enterprises have benefited more significantly under the background of tight production capacity and accelerated domestic substitution. With the subsequent production of the company’s new production line, the company’s market share in this field will be further improved. We predict that the EPS from 2021 to 2023 will be 1.52 yuan, 1.86 yuan and 2.26 yuan respectively, and the corresponding PE on February 14, 2022 will be 36.0 times, 29.4 times and 24.2 times respectively. We are optimistic about the follow-up development of the company and give a “recommended” rating for the first time.
Less than expected market demand: 1) less than expected risk. The company’s downstream areas are rail transit, new energy vehicles and other fields. If the downstream investment progress or demand is less than expected, the company’s supporting products will also be affected. 2) The risk of intensified market competition. The power semiconductor and other fields that the company focuses on at present are also facing fierce competition from international and Chinese players. If the competitive environment deteriorates, the company’s gross profit margin may decline. 3) The progress of technology research and development is less than expected. The company has a large scale of R & D investment in emerging fields. Once the investment direction deviates or the R & D progress is less than expected, it may have an adverse impact on the company’s operation and medium and long-term development.
