\u3000\u30003 Guangxi Yuegui Guangye Holdings Co.Ltd(000833) 00083)
Key investment points
The leading enterprise of CNC machine tools in China is in the stage of rapid growth
The company, formerly known as Jinsheng intelligence, has grown rapidly into a leader in the segmentation of high-end CNC machine tools in China after stripping the structural parts business and taking the battle light in 2020. The company’s machine tool business is mainly divided into 3C series products and general series products. In 2021, the operating revenue was 5.26 billion yuan (year-on-year + 53.6%), and the net profit attributable to the parent company was 500 million yuan (year-on-year + 171.7%), which significantly benefited from the recovery of the machine tool industry. We expect that in the next few years, with the elimination of the impact of business divestiture, the increase of market share of main business and prominent economies of scale, the company will usher in a period of rapid development.
The inflection point of the ten-year cycle of the machine tool industry has reached, and the industry concentration + localization rate is improving
China’s machine tool industry is large but not strong, and the high-end field needs to be broken through urgently. The annual output value of China’s machine tool industry has reached 100 billion, which is the largest market in the world, but it is in the transition stage to the localization of medium and high-grade CNC machine tools. From the perspective of competition pattern, foreign-funded enterprises occupy the high-end market, private enterprises and state-owned enterprises with certain technical strength occupy the medium and high-end market, and many private enterprises with low technology content and small scale occupy the low-end market.
Driven by the renewal cycle, the machine tool industry has ushered in a golden period of development. The turning point of the ten-year cycle of machine tools has reached, and the annual renewal demand in the next four years is expected to reach 100 billion. At the same time, domestic head brands such as Guangdong Create Century Intelligent Equipment Group Corporation Limited(300083) , Beijing Jingdiao, Ningbo Haitian Precision Machinery Co.Ltd(601882) and so on have gradually ranked in the forefront of the market. We believe that with the further highlighting of domestic leading technology and cost performance advantages, it is expected to stand out in this cycle, and the leading performance can be expected to be flexible under the scale effect.
“3C + GM” two core businesses win the golden development period
The company takes the lead in China’s drilling and attack center, with sales of more than 10000 units in 2021 and accumulated sales of more than 80000 units so far. With the rise of non-traditional 3C field and the release of stock renewal demand, we believe that the company’s drilling machine sales are expected to maintain high growth. In terms of general products, the sales volume of Lijia center of the company has doubled for four consecutive years (the sales volume exceeded 10000 units in 2021), and the sales volume accounted for 10% of the market; In addition, the company also actively distributes new products such as gantry, horizontal machining, CNC lathe and five axis machine tool, which has developed rapidly.
Rational allocation of resources, emphasis on R & D Investment & innovative sales
The company invests resources in R & D and sales services with high added value. 1) In terms of R & D, the company invested 247 million yuan in R & D in 2021, a year-on-year increase of + 17.7%, accounting for 4.7% of revenue, and achieved fruitful results. In terms of the whole machine, high-end models such as five axis vertical heater and double exchange horizontal heater have been developed. In terms of parts, 90% of the tool magazine and 50% of the spindle have been self-produced, with the industry-leading independent ability of parts; 2) In terms of sales, the company promotes the coordinated development of direct sales and distribution, and continues to push through the old and bring forth the new in terms of innovative sales.
The asset light model effectively reduces costs and increases efficiency. In the parts manufacturing link with low added value, the company mainly adopts the “independent design + entrusted processing” mode to effectively reduce the cost and increase efficiency under the asset light mode, and can reduce the business risks caused by business slack and peak seasons and cyclical fluctuations.
Profit forecast and investment rating: the company is growing rapidly. We expect the net profit attributable to the parent company from 2022 to 2024 to be 9.2/12.3/1.64 billion yuan. The corresponding dynamic PE of the current stock price is 18 / 13 / 10 times respectively, and the “overweight” rating is given for the first time.
Risk warning: macroeconomic fluctuation risk, technology and product R & D risk less than expected.
