\u3000\u30 Beijing Zznode Technologies Co.Ltd(003007) 09 Jiangsu Gian Technology Co.Ltd(300709) )
Key investment points
Investment logic: the company is a leading enterprise in the global MIM industry, with outstanding technical advantages, leading capacity market share and deep and stable customer base in the MIM field. 1) Medium and short term: benefiting from the large amount of terminal demand, the compound growth rate of revenue from folding screen mobile phone hinges and MIM pieces of wearable devices will reach 50% in the next three years; 2) Long term: the company's power transmission and heat dissipation business, and the compound growth rate of revenue in the next three years is expected to exceed 100%, opening a new growth curve.
Folding screen mobile phones: the market is accelerating and the company is expected to benefit directly as a core supplier of hinge MIM parts. 1) Industry level: benefiting from the upgrading of product performance and the sinking of price, the global shipment of folding machines achieved explosive growth in 2021, with a year-on-year increase of + 264%. It is expected to reach 28 million units in 2023, and the penetration rate will increase from 0.18% in 2020 to more than 2.5%. With the upgrading of U-shaped hinge structure to water drop type, the single unit consumption and value of hinge MIM parts may increase significantly in the future. It is expected that the market scale of folding screen mobile phone hinge and hinge MIM parts is expected to exceed 7 billion yuan and 2 billion yuan in 2023, both of which will achieve a growth of more than 3 times. 2) Company level: at present, s customers are the largest in the folding screen mobile phone market, with a share of up to 90%. The company is the main supplier of hinge MIM parts for s customers. The continuous high growth of shipment volume of s customers in 2022 will contribute an important increment to the company's performance. With the iterative optimization of H customer folding machine products, the shipment is expected to accelerate and increase the company's share, which will also thicken the company's performance. Xiaomi, glory and ov are also actively laying out the folding machine field. The company is actively developing new projects in its hinge MIM parts supply chain, which is expected to open up new incremental space in the future. At present, the company actively participates in the hinge assembly of folding machine, and the value of single hinge supply will be further improved.
Wearable: MIM process is more in line with the demand for wearable device parts, and the terminal volume injects long-term growth momentum into the company. 1) Industry level: at present, Android watches use more MIM pieces, and brand a watches are also gradually entering MIM; In addition, many parts of XR head display also adopt MIM process. We believe that in the future, the improvement of MIM process penetration and the increase of single machine consumption in wearable devices will become the industry trend. It is expected that the potential market scale of MIM pieces of wearable devices will reach about 4 + billion yuan by 2023. 2) Company level: at present, there is a trend that MIM technology gradually infiltrates into the external parts of customer a's watches, and the value of MIM single machine is expected to increase significantly; In terms of Android watches, with the improvement of the core shortage problem of H customers, the growth rate of watch shipment may gradually pick up, adding to the increase of the company's share, and the company's watch products are expected to usher in a simultaneous rise in volume and price. In addition, the company has cut into part of the VR equipment supply chain. With the accelerated volume of the terminal blue ocean market, it is expected to contribute to the performance increment of the company in the long term in the future. At the same time, the company actively promotes material innovation in MIM wearable products, and the unit price and gross profit margin are expected to increase and further boost the overall profitability of the company.
Transmission and heat dissipation: actively expand to the two 100 billion market of transmission and heat dissipation, which is expected to open a new growth curve. 1) Transmission business: in the future, the company will focus on transmission products with high value and added value, actively broaden the application boundary of transmission products, and make efforts to high growth fields such as smart home and new energy vehicles. The company extends to downstream components and lays out folding screen mobile phone hinge assembly business. The mass production of rotating shaft assembly business is expected to be completed in 2022, which will contribute to the core increment of transmission business. 2) Heat dissipation business: following the trend of increasing and expanding the demand for heat dissipation in the development of 5g and automobile electrification, the company has entered the 100 billion heat dissipation market and extended its products to downstream heat dissipation modules. It is expected to work in the direction of new energy vehicles, servers and base stations in the future. At present, the company's heat dissipation business is in the stage of small revenue and high growth rate. It is expected that the business is expected to double in the next two years.
Profit forecast and investment suggestions: we believe that the rapid growth of the company's performance in the medium and short term is highly deterministic. It is expected that the compound growth rate of the company's net profit attributable to the parent company is expected to reach 44.7% from 2022 to 2024. Considering the company's core share advantage in the folding screen hinge supply chain and being a rare MIM manufacturer in China, which takes the lead in arranging hinge assembly business and has mass production capacity, we give the company a certain valuation premium and 30 times PE in 2022. The corresponding target market value is about 9.1 billion yuan and the corresponding target price is about 58.8 yuan. For the first time, give the company a "buy" rating.
Risk tip: the shipment of folding screen mobile phones does not meet expectations; MIM process penetration does not meet expectations; The expansion of transmission and heat dissipation business did not meet expectations; The business integration and synergy effect of subsidiaries do not meet the expectations; The intensification of industry competition has led to the narrowing of share and the decline of product prices.
