Recently, Megmeet’s application for public issuance of convertible corporate bonds has been approved by the China Securities Regulatory Commission. The company plans to raise funds of 1.22 billion yuan, of which 300 million yuan will be used for the Megmeet Hangzhou High-end Equipment Industry Center Project, 310 million yuan will be used for the Megmeet Zhuzhou Base Expansion Project (Phase II), and 250 million yuan Invested in intelligent warehousing projects, and the last 360 million yuan was used to supplement working capital.
At present, Megmeet has completed the diversified product layout in the four fields of smart home appliances, Industrial power supply, Industrial automation, new energy vehicles and rail transit by virtue of its three core technology platforms, and has become a domestic power electronics platform type. Leading company. In the first half of 2022, despite the rising cost of raw materials that plagued the world, the company achieved a performance increase against the trend, and showed a trend of accelerated improvement, and the demand for orders on hand increased significantly.
In the future, in the face of rising demand from multiple industries, Megmeet, which has raised funds to expand and upgrade its production, is expected to usher in another wave of acceleration in development.
Focus on nearly twenty years
Build three major technology platforms and complete product layout
Over the years, focusing on the main tracks such as electric energy substitution and domestic substitution, Megmeet has built a relatively complete product layout.
Megmeet is an electrical automation company based on power electronics and related control technology, focusing on the transformation, automatic control and application of electrical energy. After years of R&D investment, the company has successfully built a power conversion hardware technology platform, a digital power control technology platform, automation control and communication software and other technology platforms, and continues to expand in the direction of mechatronics and thermal management integration.
Through the continuous cross-application of technology platforms, and the continuous focus on “the continuous new energy revolution under the dual-carbon goal and the accelerated downstream electric energy substitution”, and “the process of localization substitution of power electronic products in various industrial supply chains and government procurement links” “The two main lines expand the target downstream and product lines. The company has completed a diversified product layout in various fields, established a cross-field production and operation model, and is constantly enriching the technical platform foundation for the rapid expansion of related new products. According to the application fields, the company’s products mainly include four categories: smart home appliance electronic control products, industrial power supplies, industrial automation and new energy vehicles and rail transit products.
Relying on the three major technology platforms to extend a number of product categories / company announcements
Among them, the current revenue of smart home appliance electronic control products accounts for about 53%. The main subdivided products include various frequency conversion home appliance power controllers, Display equipment-related low-power power supplies (including display power supplies, OA power supplies, PC power supplies, etc.), smart Bathroom machine and parts, etc.
The revenue contribution of industrial power supplies is about 20%. The main subdivided products include communication and power equipment power supplies, server power supplies, core components of photovoltaic inverters, medical equipment power supplies, industrial rail power supplies, and LED display power supplies.
Industrial automation revenue contributed nearly 17%, and the products were subdivided into industrial control products, intelligent equipment products and precision connection products, of which industrial control products include servo and variable frequency drives, programmable logic controllers (PLC), hydraulic servo pumps, encoders, etc.; Intelligent equipment includes digital intelligent welding machines, industrial microwave equipment, intelligent oil extraction equipment, etc.; precision connections include various types of flat wires, micro-flat wires and related connecting components.
New energy vehicles and rail transit contributed 9% of the revenue. The products include new energy vehicle power electronic integrated module (PEU), motor driver (MCU), on-board charger (OBC), DCDC power supply and charging pile module, rail transit air-conditioning controller and On-board compressors, thermal management systems, etc.
The company’s products have been widely used in industrial automation equipment, household and commercial displays, frequency conversion home appliances, smart bathrooms, new energy vehicles, rail transit, refrigeration and heating, industrial vision, sensors, digital intelligent welding machines, precision connections, 5G communications, medical equipment , servers, photovoltaics, wind power generation, energy storage, lithium battery packs, industrial microwaves, petroleum equipment and many other consumer and industrial industries, and continue to extend in the field of electrical automation, extend the scope of technology, lay out product categories, and continue to penetrate in new fields. and expansion.
At present, the company has accumulated a large number of high-quality customers including Ericsson, Nokia, GE, Philips, Weidmüller, Siemens, ABB, Cisco, Juniper, TBEA (600089), BAIC New Energy, etc., whether consumer or industrial Most of the customers are the leading customers in the industry.
In the first half of 2022, despite the substantial upward pressure on upstream raw material costs, the company achieved a growth in performance against the trend, and there is a trend of speeding up.
Net profit rises against the trend
Revenue growth continues to accelerate
Simultaneous development of all businesses, Megmeet achieved a substantial increase in revenue in the first half of 2022.
In the first half of the year, under the background of the sluggish demand in the domestic home appliance industry, the company has achieved rapid growth in HVAC products and air source heat pump business by expanding high-end and overseas markets. The Japanese OA market has achieved initial success, and OA power has maintained a good growth trend. . In the first half of 2022, the company’s smart home appliance electronic control revenue was 1.43 billion yuan, a year-on-year increase of 36.88%.
At the same time, under the background of electric energy replacement, domestic new energy and other power electronic applications, as well as overseas hot demand continue to emerge, the company’s diversified layout is deeply cultivating the prosperity track and the orders of major customers in the industry, the company’s industrial power supply and industrial automation revenue increased year-on-year respectively 43.24%, 11.63% to 560 million yuan and 450 million yuan. In addition, the company has a new solution FFC for the safety signal connection components in the current new energy vehicle power battery pack. It has the advantages of low cost, fully automated production, and environmentally friendly process. It has established a cooperative relationship with a well-known new energy vehicle power battery manufacturer. It is expected to bring new revenue growth points for the company in the future.
Benefiting from the rapid development of the domestic new energy vehicle industry and strong demand from downstream clients, the company’s new energy vehicle orders have grown significantly. In addition, with the continuous optimization and integration of the domestic new energy vehicle market, the company is also gradually adjusting the previous single major customer business model for new energy vehicles, and continues to develop new customers in the field of new energy vehicles. Shi (applied to Nezha cars), Leapmotor and other OEM customers have established cooperation, and more new customers are still in the certification process, which will help the company to further expand the scale of sales revenue in the future. In the first half of the year, the company’s new energy vehicle and rail transit business achieved revenue of 250 million yuan, a year-on-year increase of 185.64%.
Therefore, the company’s overall revenue in the first half of 2022 increased significantly by 36.59% year-on-year to 2.705 billion yuan. Against the backdrop of rising global raw material prices caused by the epidemic, Megmeet’s net profit attributable to its parent increased by 14.97% year-on-year to 224 million yuan, exceeding the consensus of the market.
And it is worth noting that, in terms of split quarters, the company’s revenue growth trend is very obvious.
Since the second quarter of 2022, the company has faced unfavorable factors such as tight supply of core raw materials (restricting delivery and downstream purchases) and stronger prices of bulk raw materials (affecting profitability), in fact, signs of improvement have gradually emerged. Order deliveries are also starting to pick up speed.
Megmeet’s operating income in the second quarter was 1.512 billion yuan, a significant increase of 44.22% year-on-year, higher than the overall growth rate in the first half of the year, indicating that the revenue growth in the second quarter was accelerating, and the net profit attributable to the parent also increased simultaneously by 32.14% to 151 million yuan.
Looking forward to the future, Megmeet’s performance growth will have strong sustainability driven by the simultaneous promotion of demand in multiple downstream fields.
Four areas are driven by the same
There is huge room for market growth
First of all, in the smart home appliance industry, there are two major driving factors: the long-term replacement trend and the short-term policy stimulus.
After years of popularization of various household electrical appliances, along with the continuous improvement of residents’ income levels, the requirements for consumer experience have gradually shifted to the needs of convenience, comfort, energy conservation and environmental protection, so that household electrical appliances have been upgraded in the direction of intelligence and high-end. According to data from the China Business Industry Research Institute, my country’s smart home appliance market has grown from 224 billion yuan in 2016 to 576 billion yuan in 2021, which is an important support for the development of my country’s home appliance industry and is conducive to the development of smart home appliance electronic control products. China Business Industry Research Institute predicts that my country’s smart home market will reach 651.56 billion yuan in 2022, and the follow-up growth momentum will remain strong.
And the country has recently introduced favorable policies. On July 22, the State Council formulated the “Several Measures on Promoting the Consumption of Green Smart Home Appliances” through the Ministry of Commerce. On July 28, the Ministry of Commerce of the People’s Republic of China and 13 departments issued the “Notice on Several Measures on Promoting the Consumption of Green Smart Home Appliances”, further The implementation of 9 incentive policies such as the replacement of old household appliances for new ones and green and smart household appliances to the countryside is expected to positively stimulate the market demand for household appliances after the impact of the epidemic.
The company’s smart home appliance electronic control products integrate power conversion, logic control and frequency conversion control technologies.
Secondly, in the field of industrial power supply, not only does the overall market scale show steady growth and is driven by localized replacement demand, but the products have natural downstream ductility and are also suitable for companies to expand into multiple fields.
Because industrial equipment has the characteristics of high working conditions, harsh working environment and large differences in working environment, the production and design requirements of main components of industrial power supply are relatively high. Therefore, the common practice of industrial equipment manufacturers is to outsource the design and production of power supplies. It is supplied by a professional power supply supplier, which can meet the diversification of models on the one hand, and reduce costs on the other hand. Therefore, for industrial power supply enterprises, from design to production mode, it can efficiently meet the product needs of various industries, and then can Faster horizontal expansion to different industries.
At present, the main downstream industries of industrial power supply, in addition to photovoltaic new energy and semiconductor materials, also include glass fiber, steel metallurgy, medical equipment, communication equipment, LED display, new energy vehicles and other fields. According to the forecast of MarketsandMarkets, The global industrial power supply market will reach US$7 billion in 2021, and this figure will increase to US$9.7 billion by 2026, with a compound growth rate of 6.9%.
Moreover, in recent years, factors such as industrial upgrading of my country’s industrial enterprises, growth in demand for emerging industries, and national policy support have played a positive role in promoting the development of my country’s industrial power supply market. Domestic representative enterprises such as Megmeet will benefit more. The current company Substantial progress has been made in photovoltaic, energy storage and other related components, and it is expected to continue to expand related markets.
In the field of industrial automation, there are also dual driving factors of demand growth and domestic substitution.
Industrial automation refers to the general term for information processing and process control such as measurement, manipulation, etc., achieved by machines, equipment or production processes without direct manual intervention or less intervention according to expected goals. It is widely used in machinery manufacturing, electric power, construction , transportation, information technology, energy, aerospace and other fields, the level of its technical level has become a symbol to measure the level of national economic development and modernization of a country.
In recent years, the R&D capabilities and comprehensive strength of domestic industrial control manufacturers have been significantly enhanced, and they have gained many opportunities in import substitution. According to the relevant information of Gongkong.com, the scale of China’s industrial automation market will reach 253 billion in 2021, a year-on-year increase of 22%, and there is still a lot of room for growth.
In the second quarter of 2022, although there was a short-term impact on the demand of the industry due to the spread of the local epidemic and prevention and control, as the local epidemic situation in China has been controlled to a certain extent since May and various policies for stabilizing growth have been proposed and gradually implemented, the agency believes that the manufacturing industry The second quarter is expected to usher in an inflection point of prosperity, and the transmission to industrial automation and other links is expected to reverse in the third to fourth quarters.
At present, downstream such as new energy, lithium battery, power grid, and large-scale infrastructure projects are expected to become the main growth contributors. High-quality domestic enterprises with strong market share and influence, and a high degree of downstream revenue structure fit are more expected to be in the second half of the industry recovery process. Gain growth beyond the industry.
In the field of new energy vehicles and rail transit, market demand is exploding.
The latest data from the China Automobile Association shows that in the first half of 2022, the production and sales of new energy vehicles in my country were 2.661 million and 2.6 million respectively, an increase of 1.2 times year-on-year. The scale of production and sales reached a new high, and the market penetration rate reached 21.6%.
The rapidly growing demand for new energy vehicles has driven the development of the charging pile industry. According to the latest charging pile data released by the China Electric Vehicle Charging Infrastructure Promotion Alliance, as of June 2022, members of the alliance reported a total of 1.528 million public charging piles, an increase of 109,000 from the previous month and a year-on-year increase of 65.5%.
Among them, there are 665,000 DC charging piles, 863,000 AC charging piles, and 472 AC-DC integrated charging piles. From July 2021 to June 2022, about 50,000 new public charging piles will be added per month. According to the analysis of Guoyuan Securities, the total investment in the charging pile market in the next ten years will be nearly one trillion yuan, and the cumulative market space is expected to exceed 100 billion yuan from 2020 to 2025.
While making full efforts in the downstream application field, Megmeet’s fundraising and upgrading plan will greatly enhance the company’s competitiveness and profitability.
Fundraising to expand production and upgrade
Competitiveness comprehensively improved
The first is the construction of the Megmeet Hangzhou High-end Equipment Industry Center project. While improving the regional layout, it enhances the production capacity of the intelligent oil production system and the intelligent bathroom business, and further consolidates the advantages of research and development.
The project will build a full-featured industrial center in Hangzhou that integrates R&D, manufacturing, testing and verification, marketing, exhibition halls, and training. The Megmeet Yangtze River Delta Regional Headquarters will be built, which will improve the company’s layout in the Yangtze River Delta region. At the same time, it will expand various resources such as sites and equipment for the intelligent oil production system business, expand the production capacity of the submersible screw pump intelligent oil production system, and accelerate the expansion of the oil production system business.
And it can further deploy the production capacity of smart bathroom, expand the supply scale of the company’s smart bathroom products, and increase the market penetration rate of the company’s smart bathroom products. The newly built R&D center building can once again enhance the company’s R&D strength and maintain the company’s technological R&D advantages.
The construction period of the project is 3 years, the project internal rate of return is 20.43% (after tax), the static investment payback period (after tax) is 8.57 years, and all indicators of financial profitability are good.
The Megmeet Zhuzhou Base Expansion Project (Phase II) can increase the production capacity of inverter controllers and industrial power products, improve the company’s production management efficiency and achieve large-scale production of industrial power supply systems.
The project will build a new production base in Zhuzhou City. On the basis of existing production experience and technical reserves, an inverter controller and industrial power supply production line will be set up, which will directly expand the company’s production capacity of inverter controller and industrial power supply products to cope with the growing market demand. At the same time, the company can increase the supply scale of its own venues, solve the current problem of insufficient venues, reduce operational risks and improve production management efficiency.
In addition, the company can realize the large-scale production of industrial power supply system, complete the transformation from an industrial power module supplier to a complete system supplier, and further promote the company’s profitability. The construction period of this project is also 3 years, the internal rate of return is 18.30% (after tax), and the static investment payback period (after tax) is 7.24 years.
Although the final intelligent warehousing project does not directly generate profits, it can achieve the purpose of reducing costs and increasing efficiency, ensuring stable supply and product quality.
The project will build an intelligent storage center of 32,000 square meters in Zhuzhou City, Hunan Province, including a fully automatic three-dimensional storage system and supporting material inspection and testing center, material preprocessing center, sorting center and supporting park logistics central control center.
The improvement of warehousing and logistics service capabilities can not only cope with the company’s upcoming rapid development, but also achieve the goal of reducing costs and increasing efficiency by improving the automation and intelligence of warehousing and logistics operations. In addition, it is also conducive to improving the storage and testing capabilities of raw materials, ensuring the stability of the company’s product supply and the improvement of product quality. The construction period of the project is 2 years.
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