Grind a sword in 10 years. Hechuan technology, established in 2011, has experienced the first decade of development and ushered in new opportunities in the second decade. On April 28, Hechuan technology officially landed on the science and innovation board, with the stock code of 688320.
Hechuan technology is a technology driven provider of core components and overall solutions for industrial automation control, mainly engaged in the R & D, production, sales and application integration of industrial automation products. After landing in the capital market this time, Hechuan Technology issued 37.76 million shares, no less than 25% of the total share capital after issuance.
This time, Hechuan technology expects to invest 801 million yuan in four projects: digital chemical plant project, Hangzhou research institute project, marketing service network construction project and supplementary working capital. At present, international brands in the industrial automation industry still occupy a dominant position in the market. However, the industrial automation control industry belongs to the category of high-end manufacturing industry and is an industry supported and encouraged by the national industrial policy. National industrial policy support, technology upgrading and iteration, and the trend of domestic automation equipment replacing imports will also bring a new round of opportunities to domestic industrial automation enterprises such as Hechuan technology.
servo system accounts for 89.72% of the main business
According to the prospectus, Hechuan technology’s main products include servo system, PLC, etc., covering the control layer, driving layer and executive sensing layer in the field of industrial automation. In recent years, Hechuan technology has continuously extended along the upstream and downstream of the industrial chain, and set foot in the fields of industrial control chips, sensors and high-end precision CNC machine tools in the upstream and downstream.
The company’s consolidated income statement data show that in the past three years, the company’s revenue and net profit have maintained a relatively stable development. From 2019 to 2021, the revenue was 313 million yuan, 544 million yuan and 751 million yuan respectively, and the net profit was 476263 million yuan, 106 million yuan and 108 million yuan respectively.
From the perspective of the composition of main revenue products, servo system is the core product of Hechuan technology at present. In 2021, the revenue of servo system totaled 659 million yuan, accounting for 89.72% of the main business of Hechuan technology. The revenue of PLC products in 2021 was 399628 million yuan, accounting for 5.44% of the main business revenue.
At present, distribution is still the main sales mode of Hechuan technology. In 2021, distribution accounted for 76.51% of the main business income and direct sales accounted for 23.49%. From the list of the top five customers disclosed by the company, in the past three years, the structure of key customers has gradually developed from distribution to both distribution and direct sales. In 2021, the sales revenue of the top five customers accounted for 15.99% of the company’s main business revenue.
Hechuan technology introduced that since 2015, the company has gradually changed from a single product supplier to a provider of core components and overall technical solutions, focusing on improving the efficiency and ability of R & D and production, vigorously exploring the depth of the market, replacing foreign brands in downstream 3C electronics, lithium battery, logistics, industry Siasun Robot&Automation Co.Ltd(300024) and other industries to form customized solutions, covering Foxconn Industrial Internet Co.Ltd(601138) , Contemporary Amperex Technology Co.Limited(300750) S.F.Holding Co.Ltd(002352) , three connections and one access, Longi Green Energy Technology Co.Ltd(601012) , Shenzhen S.C New Energy Technology Corporation(300724) , Wuxi Lead Intelligent Equipment Co.Ltd(300450) , Lens Technology Co.Ltd(300433) , Efort Intelligent Equipment Co.Ltd(688165) and many other industry leading enterprises.
Looking back on the past ten years, Hechuan technology has experienced a business expansion process from small to large. It is understood that in the early stage of its establishment, Hechuan technology took PLC products as the market entry and expanded the sales strategy of potential customers of driving products through it. In May 2012, the company officially launched the first small PLC series and successfully entered China’s industrial automation market; Since then, we have successively launched self-developed core components in the field of industrial automation control such as servo system, low-voltage frequency converter and HMI, and provided integrated solutions for customers by integrating our own products; In 2015, the company independently developed sv-x3 series servo system, which has become the core product of the company.
Since 2016, Hechuan technology has further extended along the upstream and downstream of the industrial chain and successively achieved breakthroughs in core components such as encoders, industrial control chips and smart cameras.
In the future, the company will also increase the layout of electromechanical layer and digital chemical plant, and strive to provide customers with overall solutions from core components, machine automation to digital chemical plant.
industrial automation domestic substitution welcome opportunity period
The industrial automation industry where Hechuan technology is located is one of the most important core technologies and industries in the field of modern manufacturing since the 20th century. It involves many fields such as power, electronics, computer, artificial intelligence, communication, electromechanical and so on. It needs to use advanced technologies such as control theory, instruments and meters, computer information technology and so on. It is a comprehensive discipline industry with remarkable characteristics such as technology intensity, high investment and high efficiency, It is a typical high value-added industry.
Industrial automation control system devices have high technical content, strong professionalism and a wide range of applications. After decades of development and survival of the fittest, the world industrial automation industry has formed a situation in which a few multinational companies produce on a large scale and dominate the global market. Famous brands include Germany Siemens, Japan Panasonic electric, Japan Mitsubishi Electric, Japan Yaskawa electric, etc.
In recent years, the development of cutting-edge technologies such as artificial intelligence, Siasun Robot&Automation Co.Ltd(300024) technology and electronic information technology has accelerated the integration of mechanical and electronic systems, benefited from the improvement of industrial automation level, and the demand for industrial automation products is growing. According to the statistics of reportlinker, the global industrial control and factory automation market reached US $269.5 billion in 2019, and the market scale has continued to grow in recent years.
According to a series of strategic plans previously released by China, the development of intelligent manufacturing is listed as an important direction to improve the competitiveness of China’s manufacturing industry, and cultivating a number of domestic brand manufacturers of industrial automation who can independently develop core technologies is the basis for China to vigorously develop intelligent manufacturing. With the accumulation and innovation of China’s industrial automation technology and the support of relevant national industrial policies, domestic industrial automation control products gradually show advantages in product adaptability, technical services, cost performance and so on.
According to the 2021 China general servo Market Research Report issued by Rui industry, the company’s overall share in China’s general servo market in 2020 was about 3%, ranking second among Chinese manufacturers.
Hechuan technology believes that in the future, with the deepening of the industrial Siasun Robot&Automation Co.Ltd(300024) industry, the further improvement of the degree of industrial automation and the in-depth promotion of intelligent manufacturing, the servo system market will have a new round of rapid growth, especially with the continuous improvement of the R & D level of domestic servo technology, the pace of import substitution of domestic servo systems will be accelerated, and the rise of domestic brands in servo systems will become more and more obvious.
According to the data of Mir Rui industry, the market scale of domestic servo brands reached 4.964 billion yuan in 2020, with a year-on-year increase of 34.40%. The proportion of domestic brands in China’s overall servo market scale increased from 22% in 2018 to 30% in 2020.
Industrial automation has shown three major development trends in recent years. First, the introduction of new technologies will become a new engine for the growth of the industry. Second, intelligence will become the mainstream of the development of industrial automation industry; Third, the overall solution will gradually replace the supply and marketing system of single equipment. Hechuan technology also closely grasps the three major trends of the industry and plans the layout of the company’s technology and business.
overweight R & D focusing on hard technology
The industrial automation industry tests the quality and strength of hard technology of all participants in the industry. The introduction and integration of big data, artificial intelligence, 5g, visual recognition and other technologies will profoundly change the automation industry and its service enterprises and become a new growth engine. To keep pace with the times, enterprises need to make continuous investment and breakthroughs in science and technology and R & D.
The prospectus of Hechuan technology disclosed that as of March 16, 2022, the company had 19 invention patents, 82 utility model patents, 67 design patents, 80 software copyrights and 9 exclusive rights of integrated circuit layout design, covering hundreds of models of industrial automation control core components. It is an independent high-speed encoder manufacturer in Zhejiang Province, and it is also an “independent high-precision industrial encoder research and development enterprise” in China.
From 2019 to 2021, the R & D investment of the company was 454699 million yuan, 674071 million yuan and 870013 million yuan respectively, accounting for 14.53%, 12.39% and 11.58% of the current operating revenue respectively. As of December 31, 2021, the company had 316 R & D personnel, accounting for 22.80% of the total employees.
Hechuan technology mentioned in its competitive advantages that the company has long-term solid technology accumulation and R & D advantages of two wheel drive, product advantages of complete industrial automation core components and benchmarking mainstream brands, cost advantages under the fine management of “vertical integration of research, production and marketing”, customization advantages of deep penetration into downstream industries, etc. In order to continue to maintain and enhance the competitive advantage of listed companies, Hechuan technology also invested most of the raised funds in relevant projects in this IPO.
It is understood that there are 4 projects raised and invested this time, of which 385 million yuan is planned to be invested for the construction of digital chemical plant project; 141 million yuan is used for the construction of Hangzhou research institute project, 752269 million yuan is used for the construction of marketing service network project, and 200 million yuan is used for replenishment. Hechuan technology believes that the investment projects of the raised funds are carried out around the company’s existing main business. After being put into operation, it will further expand the production scale of the main business, optimize the company’s product structure, improve the technical content of products, and enhance the company’s market competitiveness and anti risk ability.
For the future development strategy of the company, Hechuan technology said that in the future, the company will continue to work in the field of industrial automation, comprehensively upgrade technology R & D, production, marketing, technical services and management, actively connect with the capital market, and maximize the services and social value of shareholders, customers and employees.
