\u3000\u3 Jiangsu Eastern Shenghong Co.Ltd(000301) 029 Dongguan Yiheda Automation Co.Ltd(301029) )
Key investment points
China is a scarce one-stop supplier of automation parts with rapid growth in performance. The company specializes in R & D, production and sales of automation parts and provides one-stop supply services of automation parts in FA factory. By the end of 2020, the company has developed a fa factory automation parts product system covering 176 categories, 1404 subcategories and more than 900000 SKUs, which has been compiled into a product catalogue manual; The annual order processing volume is about 550000 orders, the annual total shipment volume is more than 2.3 million items, and 90% of standard parts can be delivered within 3 days; The cumulative number of customers has exceeded 40000, serving 3C, automobile, new energy, photovoltaic and other industries, with high brand awareness. The company's performance achieved rapid growth, with revenue CAGR = 33.92% and net profit attributable to the parent company CAGR = 43.60% from 2017 to 2020. In 2021q1-q3, the company's revenue was 1.329 billion yuan (year-on-year + 60.25%), and the net profit attributable to the parent company was 307 million yuan (year-on-year + 65.12%). At the same time, the sharp price rise of raw materials such as steel was also well transmitted to the downstream. The gross profit margin of 2021q1-q3 reached 44.0% (year-on-year + 0.53pct) and the net profit margin of sales reached 23.1% (year-on-year + 0.68pct).
The "one-stop" mode solves the pain points of the industry and opens up the growth space for automation needs
Under the traditional procurement mode, customers usually have engineers draw, select and submit demand applications for each part respectively, and the procurement department performs material procurement. They often face problems such as low procurement efficiency, high cost, uncontrollable quality, untimely delivery and so on. Under the one-stop procurement mode, the company standardizes non-standard products, serializes and modularizes existing standard products, and matches with auxiliary tools such as product catalog manual and online selection procurement system, which can effectively improve the efficiency of customer design and procurement. Intelligent manufacturing and industrial automation are the general trend. Its main downstream industries Siasun Robot&Automation Co.Ltd(300024) , smart phones, new energy vehicles, lithium battery equipment and photovoltaic equipment are in the golden development period. As an automation parts supplier, the company will fully benefit from the development opportunities of intelligent manufacturing.
Benchmarking with international leader Mismi, there is a broad space for growth
Mismi is a global leader in the one-stop supply of automation parts. In fiscal year 2021, the revenue of FA automation business reached 6.39 billion yuan (the exchange rate is based on Japanese Yen: 16:1). In addition, the revenue from the Chinese market was 3.97 billion yuan. In fiscal year 2020, the number of commodity categories distributed reached 26.7 million, covering 301400 customers. Compared with the international leader Mismi, Dongguan Yiheda Automation Co.Ltd(301029) still has a certain gap in category richness, number of customers, delivery speed, operating income, information and digitization, per capita income generation, etc., but has advantages in localized services, profitability and applicability to local automation equipment. On the whole, with the continuous enhancement of the company's strength in product categories, supply chain management and other aspects, its competitive advantage will become more and more obvious. Under the background of the rapid development of automation in China, there is a broad growth space.
Profit forecast and investment rating: as the leading supplier of local automation parts, the company actively expands its business field, improves its competitive advantage and has outstanding growth. We expect the net profit attributable to the parent company from 2021 to 2023 to be RMB 400 million, RMB 590 million and RMB 850 million respectively, and the corresponding dynamic PE of the current stock price is 68, 46 and 32 times respectively. For the first time, give a "overweight" rating.
Risk tips: the development of downstream industries is less than expected, the risk of intensified market competition, the risk of new product development, and the risk of loss of core personnel.
