Ningbo Dechang Electrical Machinery Made Co.Ltd(605555) (605555)
Report summary
1、 Company profile
From 2017 to 2020, the company's revenue CAGR is 26%, and the parent CAGR is 44%, with good growth. The revenue of 21q1-q3 was yoy + 59%, which belonged to the parent company of 220 million, yoy + 14%, and the net interest rate was 9.9%, which was -3.9pct compared with the same period, mainly due to the damage to the profit of OEM business.
In terms of revenue structure, the company's core revenue source is vacuum cleaner OEM, accounting for 78% in 2020. In addition, the company newly developed hair care small household appliance OEM business, accounting for 15% in 2020. At present, the company's core focus is the new entry into the EPS motor business of automobile and the profit recovery of household appliance OEM business.
2、 Opportunities for domestic replacement of Automotive EPS motors
Automotive EPS motor is the core component of automotive electronic steering system. In 18 years, the market scale in China was 4.6 billion, and foreign brands accounted for about 80%. At present, the rapid and large-scale superposition of new energy vehicles has impacted the overseas supply chain, providing good opportunities for new domestic entrants.
Dechang has been developing EPS motors since 2017, and has reached cooperation with some auto enterprises. It is expected to enter the stage of large-scale revenue; At the same time, due to the relatively high barrier of EPS motor, the business is expected to improve the overall profit margin of the company; In the long run, the company is expected to expand other automotive motors with similar processes after breaking through and mastering relevant technologies and successfully entering the supply chain of automobile enterprises.
3、 Profit recovery of household appliance OEM
Benefiting from the epidemic, China's vacuum cleaner exports have maintained high growth in 2020 and 2021. Since 2021, the profits of OEM enterprises have been suppressed due to a series of negative factors such as raw materials, exchange rate and shipping. It is expected that Ningbo Dechang Electrical Machinery Made Co.Ltd(605555) will usher in a large degree of profit recovery under the background of easing negative repression factors. At the same time, the company is expected to achieve revenue growth by expanding the scope of cooperation with core customers and looking for new customers.
4、 Earnings and valuation
It is estimated that the company will realize revenue of RMB 3.03 billion, RMB 3.49 billion and RMB 4.01 billion respectively from 2021 to 2023, with a year-on-year increase of + 47%, + 15% and + 15%. The return to the parent was RMB 310 million, 460 million and 560 million, with a year-on-year increase of + 2%, + 50% and + 20%. The company's household appliance OEM customer relationship is stable and has the expectation of profit repair and category expansion. At the same time, the company's automotive motor business reserve is deep and is expected to enter a period of rapid growth. For the first time, give a "buy" rating.
Risk warning: the development of automobile business is not as expected, overseas consumption has deteriorated significantly, the price of raw materials has risen again, customer concentration risk, business model risk, and the information used in the research report is not updated in time.
