Suzhou Veichi Electric Co.Ltd(688698) (688698)
1、 Event overview
Recently, the general office of the Ministry of industry and information technology and the general office of the State Administration of market supervision jointly issued a notice on the motor energy efficiency improvement plan (2021-2023). The plan proposes to carry out energy-saving transformation of stock motors. Give priority to high-efficiency and energy-saving motors and speed up the elimination of backward and low-efficiency motors that do not meet the requirements of the current national energy efficiency standards.
2、 Analysis and judgment
Industrial control has long-term growth logic and domestic substitution is accelerated
China’s production line automation rate is still low. With the gradual transformation of demographic dividend into engineer dividend and the improvement of product production accuracy, it is an inevitable trend to improve the level of industrial automation. According to Mir data, it is expected that after 2021, the demand of industrial control market will gradually callback and stabilize, and the market scale will reach 253.2 billion yuan in 2023. From the perspective of competition pattern, after years of learning and accumulation, the technical gap between domestic high-quality industrial control enterprises and foreign first-line manufacturers is accelerating convergence. With the localization advantages of high cost performance, rapid delivery and flexible response, it is constantly improving its brand influence and market share, and accelerating the penetration from the middle and low-end market to the middle and high-end market. According to Mir, the market share of domestic brands in industrial control has gradually increased from 24.8% in 2009 to 40.8% in 2020. The growth rate of orders and performance far exceeds that of the industry. The industrial automation industry is in the acceleration period of domestic substitution.
The improvement of high-performance product line has been accelerated and the development of the industry has been fruitful
Driven by technological innovation, the company has maintained the R & D expense rate at more than 9% in recent years. With high R & D investment, the company has mastered the key technologies of relevant components of asynchronous induction / permanent magnet synchronous / synchronous reluctance motor, and the product layout of PLC, encoder and so on is gradually improving. Under the dual carbon background, high-efficiency motors are in high demand. The company has been deployed in this field for many years and has outstanding technical strength. At present, only a small part of asynchronous motors in China are matched with frequency converters. According to the demand for 1:1 supporting frequency converters for high-efficiency motors, this business is expected to make a great contribution to the performance growth of the company in the future. Relying on the marketing system of “region + industry”, the company has deeply cultivated sub industries such as lifting and photovoltaic water lifting, accelerated the expansion of emerging industries such as lithium battery and energy storage, and launched industry system solutions in many industries. The product line is perfect, the industry expansion is smooth, and the development momentum is good.
3、 Investment advice
We estimate that the company’s revenue from 2021 to 2023 will be RMB 808 million, RMB 1179 million and RMB 1.734 billion respectively, with revenue growth of 41%, 46% and 47% respectively, net profit of 1.26, 1.98 and 2.89 respectively, net profit growth of 43%, 58% and 46% respectively, and EPS of 0.7, 1.1 and 1.6 yuan respectively, corresponding to 38, 24 and 17 times PE respectively. The company is in the period of rapid performance growth, accelerating the development of various product lines, referring to the 49 times PE level of SW industrial control automation sector (TTM, wind consistent profit expectation), covering for the first time and giving a “recommended” rating.
4、 Risk tips:
Downstream demand is less than expected, market development is less than expected, etc.
