SDIC Securities released a research report saying that with the help of the national policy side, domestic machine tool companies are expected to fully benefit under the catalyst of renewal demand combined with domestic substitution.
The Zhitong Finance App learned that SDIC Securities released a research report saying that with support from the national policy side, domestic machine tool companies are expected to fully benefit from the catalyst of renewal demand combined with domestic substitution. In terms of targets, it is recommended to focus on the two major directions of new markets (going overseas) + new applications (humanoid robots): positioning high-end machine tools, Haitian Precision (601882.SH), Neway CNC (688697.SH), and Haomai Technology (002595.SZ), etc.; new applications (humanoid robots): the main business is growing steadily, and new applications provide performance flexibility. It is recommended to focus on Zhejiang Heidman (688577.SH), Huachen Equipment (300809.SZ), etc.
SDIC Securities views are as follows:
Update and iteration: It is expected to drive a new round of machine tool equipment renewal and replacement needs.
Judging from the demand for updates and iterations, the machine tool life span is 8-10 years, and the last round of demand was high in 2021. According to data from the National Bureau of Statistics, the total machine tool output in 2021 was 602,000 units, 70.00% of the 860,000 units produced in 2011; in 2022 and 2023, China's metal cutting machine tool output was 572,000 units and 612,500 units, respectively, accounting for 72% and 84% of the output in 2012 and 2013, respectively. The potential for machine tool stock renewal is yet to be unleashed, underpinning the needs of the machine tool industry. With the help of this policy side, it is expected to promote the upgrading of machine tool equipment.
Domestic replacement: Autonomous control of high-end industrial motherboards is expected to accelerate.
Looking at domestic alternatives, foreign investment still accounts for a large share of high-end machine tool applications (aerospace, military). According to the Huajing Industry Research Institute, in China's five-axis machine tool market in 2020, foreign investors such as Demagison, GROB, and Hemler accounted for 12%, 11%, and 3% respectively, while domestic market shares of Beijing Jingdiao and Kode CNC were 11% and 5% respectively, and the localization rate of five-axis machine tools in China was less than 20%. Domestic machine tools have basically met the requirements in terms of static indicators, and they still need to accumulate experience in terms of dynamic indicators. This policy effort is expected to promote the transformation and upgrading of machine tool equipment in high-end segments. As national policies promote trial opportunities for downstream customers, domestic machine tool substitution is expected to accelerate.
Overseas opportunities: Machine tools have broad prospects for going overseas, opening up room for improvement in the industry.
The domestic machine tool market is fiercely competitive in the middle and low end sectors, while the overseas market space is broad and the competitive pattern is good. As the product performance of leading domestic machine tool companies continues to improve, and the combined cost performance advantages stand out, it has become a trend for domestic machine tool companies to go overseas.
Industry: According to statistics from the China Machine Tool Industry Association, since 2011, metalworking machine tool exports have continued to rise. In June 2023, all nine commodity sectors of machine tools achieved trade surpluses. The total export value of metalworking machine tools reached 7.78 billion US dollars in 2023, an increase of 25.4% over the previous year.
Company: Domestic machine tool leaders have a perfect global layout, and the share of overseas revenue continues to rise. In 2022, Haitian Precision Engineering/Neway CNC accounted for 10.62%/17.93% of overseas revenue, respectively, +3.66pct/5.59pct. Haitian Precision relies on Haitian Group. The Group's products and customers cover 130+ countries around the world. In 2023H1's injection molding machine business (Haitian International) accounts for 39.25% of overseas revenue; Neway CNC relies on Neway Group. The group has established 5 wholly-owned overseas subsidiaries, and its valve processing business (Neway shares) accounts for 58.54% of overseas revenue in 2022. The group company is rich in overseas channel resources. Haitian Precision and Neway CNC are expected to rely on the overseas resources of their respective groups to continue to increase their overseas market layout, and overseas business is expected to continue to expand.
Investment advice
With the help of the national policy side, domestic machine tool companies are expected to fully benefit under the catalyst of renewal demand combined with domestic substitution. In terms of targets, it is recommended to focus on two major directions: new markets (going overseas) +new applications (humanoid robots):
New markets (overseas): Positioning high-end machine tools, [Haitian Precision], [Neway CNC], [Haomai Technology], etc. with the logic of going overseas;
New applications (humanoid robots): The main business is growing steadily, and new applications provide performance flexibility. It is recommended to focus on “Zhejiang Heidman”, “Huachen Equipment”, etc.
Risk warning
Policy progress fell short of expectations, downstream capital expenditure fell short of expectations, and overseas expansion fell short of expectations.