Two main businesses are growing

Huichuan Technology is a leader in industrial automation. Its business was originally a single frequency converter and elevator integrated controller, and now it has developed into five business segments, including general automation, elevators, new energy vehicles, industrial robots, and rail transit.

These five businesses performed differently last year, and last year’s revenue growth was mainly related to the two major businesses of General automation and new energy vehicles.

In the announcement, Huichuan Technology said that the company’s general automation business achieved rapid growth; The new energy vehicle business achieved rapid growth in sales revenue due to reasons such as “increasing penetration rate, increasing quantity of fixed-point models of the company, and guaranteeing supply and delivery”.

General automation business is the basic plate of Huichuan PXIE-2503 technology, and this business accounts for more than 50% of annual revenue.

“The company has seized the structural market in lithium, photovoltaic, wind power, semiconductors, automotive equipment and other industries. In these sectors, the company continues to see rapid sales growth in related products, which is an effective hedge against a slowdown in overall market demand.” In an investor research in December last year, Song Junen, vice president of Huichuan Holding Technology and secretary of the board, said.

PLC (Programmable logic controller) products are also growing rapidly. PLC is the core product of equipment automation and production line automation. A key direction of current research and development investment of Huichuan Technology is the control layer products based on PLC.

Song Junen expects that in 2023 PLC business will also maintain rapid growth, at the same time, “I believe that the next 2-3 years will usher in the acceleration of PLC localization.”

Dongwu Securities believes that the general automation business demand of PXIE-2503 Huichuan technology in 2023 is expected to recover, and is expected to achieve a year-on-year growth of more than 30%.

New energy vehicle business accounted for about 20% of the closing of Huichuan technology business.

According to Song Junen, the number and quality of new energy vehicles added by the company last year were relatively good, and the number of traditional domestic A-class car companies and overseas car companies increased rapidly. From the point of view of orders, it has changed the situation of relying on a single group of new power customers in the past, and orders from traditional car enterprises such as GAC and Chery began to increase last year, forming a better support for income.

According to Soochow Securities estimates, the revenue of Huichuan technology’s new energy vehicle business is between 4.5 billion and 5 billion yuan.

While revenue has been bolstered by the new energy vehicle business, profits have been dragged down.

The new energy vehicle business is the low gross PXIE-2503 margin business of Huichuan Technology, and the gross margin of sales of this business in recent years is between 20% and 25%, and it was still in the loss period last year. This business volume, pulling down the company’s overall gross margin.

“The growth rate of new energy vehicle business is faster than other businesses, this business is affected by the industry chain competition, including its own gross margin is also low, its fast growth rate will bring about an increase in the proportion of structure, and then have an impact on the comprehensive gross margin.” Huichuan technology investment department of the interface news said.

The rise of new energy vehicle business can be expected, will the gross profit margin continue to decline in the future?

In this regard, the above people said to the interface news that from the single factor PXIE-2503 of new energy vehicles, there will indeed be such an impact. “But the combined gross margin is the result of many factors. Others do a better job of offsetting or minimizing the impact of structural change.”

Citic Construction Investment believes that Huichuan Technology new energy vehicle business is expected to gradually start to make profits from 2023.

The industrial robot business is the business that Huichuan Technology began to layout in 2016, and has achieved profit in 2021, but the scale is still very limited. Song Junen revealed that the company’s industrial robot business sales orders achieved more than 50% growth. “In the long term, the company is still very optimistic about the development of industrial robots.”

Third-party MIR data shows that Huichuan Technology’s shipments of industrial robots in 2022 reached 14,650 units, an increase of 41.57% year-on-year, and its market share was 5.16%, an increase of 1.15 percentage points year-on-year.

The elevator business has become the short board of Huichuan technology last year. Affected by the double impact of the epidemic and real estate, the company’s elevator business was under greater pressure last year. However, Song Junen believes that in 2023, the elevator industry is expected to recover from the decline to the flat, “we are expected to achieve certain growth.” The reason is the growth of the elevator business overseas, the promotion of total solutions sold by multinational companies, and the growth of the post-service market fostered by digital solutions.