Looking back at the tone of Johnson Electric Holdings' (00179) market performance this year, the word "recovery" seems to be the most appropriate. As of December 15, the company's share price has fallen from a low of 6 in October last yearHK$68 to 12HK$82, although there are some twists and turns on the way, it has risen by nearly 100% in the past year, and the stock price has hit a new high since March 2022.
Coincidentally, in the latest semi-annual report, Johnson Electric also achieved a good result of a 115% year-on-year increase in net profit attributable to shareholders. On the news side, on December 11, southbound funds once again increased their holdings of Johnson Electric Holdings by 20900,000 shares, recording an increase in holdings for 7 consecutive days;Citi raised its target price by 21% from HK$14 to HK$17 and raised its net profit for FY2024-2026 by 17%-26%.
The performance and stock price are both rising and superimposed on the institution, has Johnson Electric, the old auto parts leader, entered the high-growth channel?
Net profit increased by 115% year-on-year, and the interim report continued to grow at a high rate.
Founded in 1959, Johnson Electric Group is a large multinational group of companies headquartered in Hong Kong, with a global leadership position in the design, development and manufacture of micromotors and integrated motor systems. Dechang Micromotor products are widely used in consumer and commercial products, including auto parts, household appliances, power tools, commercial equipment and personal care products, multi-** and audio-visual products.
According to the latest financial report, Johnson Electric recorded gratifying results. For the six months ended September 30, 2023, operating income was approximately 19US$3.7 billion, an increase of 945%;Net profit attributable to shareholders increased by 115% to 1US$200 million, underlying net profit increased by 66% to 1$300 million, or 12.2 percent per diluted shareUS99 cents, with an interim dividend of HK17 cents per share.
The company's financial position improved significantly, with free cash flow from operations of 2.$0.8 billion, with a total debt-to-capital ratio of 13% and a cash balance of 4$400 million.
According to Zhitong Financial APP, Johnson Electric's interim report obviously continued the good momentum of the previous fiscal year. In the fiscal year ended March 31, 2023, the company achieved a turnover of 36US$4.6 billion, an increase of 58%;Profit attributable to shareholders was 1US$5.8 billion, an increase of 779%。
In the latest semi-annual report, the company's net profit exceeded the threshold of 100 million US dollars again after 3 years, compared with the same period in 2020, although the revenue increased (compared to 15. in H1 2020US$6.5 billion), but net profit did not return to the level of the same period in previous years (compared to 1. in H1 2020$6.2 billion).
In terms of markets, the Company's revenue increased by % and 16% in Asia, Europe and the Americas respectively during the period, all of which performed strongly.
Looking ahead, the company noted that despite the encouraging results in the first half of the year, there are reasons to be cautious, and the company expects full-year revenue growth to be between 5% and 7%, which is within the initial budget for the financial year.
The downstream maintains a high degree of prosperity and the growth rate of overseas markets is leading.
Automotive products have always been Johnson Electric's top source of revenue**. According to the latest interim report, the automotive product group accounted for 84% of the Group's total turnover during the reporting period, and turnover increased by 17% at constant exchange rates, which was significantly higher than the global automotive industry's production growth of about 10% during the same period. In contrast, industrial and commercial products, which accounted for 16% of total turnover, generated 17% of the total turnover during the period**, mainly due to weak demand for household goods.
Benefiting from global automakers' efforts to accelerate their electrification transition, Johnson's automotive products accounted for an increase in the share of vehicle sales, mainly from sales of new drive-related products such as electric water pumps, cooling water valve subsystems, and integrated thermal management subsystems.
According to market research firm TrendForce, the total global NEV sales in the third quarter of this year were 34550,000 units, an increase of 28 compared to the same period last year1%, of which battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs) accounted for about 70% and 30% of sales, respectively. Plug-in hybrid electric vehicle (PHEV) sales increased by 47% year-on-year8%, which continues to be an important driving force for the growth of the new energy vehicle market.
However, at the same time, the slowdown in the growth rate of new energy vehicle demand has been reflected in the performance of relevant listed companies. According to the statistics of Minsheng**, among the 94 listed companies in the new energy vehicle sector, the total revenue in the first half of the year was 76591.1 billion yuan, a year-on-year increase of 2852%;The net profit attributable to the parent company was 6652.9 billion yuan, a year-on-year decrease of 1311%。Among them, profitability continued to decline in the second quarter, achieving a net profit attributable to the parent company of 3395.4 billion yuan, down 24 percent year-on-year24%。
According to Zhitong Financial APP, in the first half of this year, the penetration rate of new energy vehicles in China has reached 324%。With domestic growth approaching the ceiling, overseas markets are becoming the starting point for more and more new energy vehicle companies to seek new growth points.
From a macro point of view, the Nordic region attaches great importance to the use of renewable energy and environmental protection, and has abundant power resources, while Western Europe and North America have a low penetration rate of new energy vehicles, and have greater room for expansion.
In terms of overseas markets, Johnson Electric's overseas business is progressing well, with Europe and the Americas leading the growth rate in Asia. By region, the fastest growth in the company's automotive products business during the reporting period was in Europe, the Middle East and Africa, with revenue increasing by 25%, mainly due to higher revenue in thermal management, power steering, engine and fuel management, oil pumps and water pump application systemsTurnover increased by 16% in the Americas and 12% in the Asia-Pacific region.
New energy vehicles "involution", automotive micro-motor is expected to benefit
According to Zhitong Financial APP, the micro motor involved in the automobile industry chain refers to the motor with a power of less than 750K and an outer diameter of no more than 160mm. Its power is small, the driving force is not as good as the power motor, and its main function is to drive car doors and windows, seats, lidar and cameras. From the perspective of specific end products, high-end passenger cars and new energy vehicles are its main application fields.
It is understood that under normal circumstances, a car will be equipped with a generator, a number of micromotors (an average of 15-20), high-end luxury cars need to be equipped with 60-70, high-end new energy vehicles are up to hundreds. Therefore, the sales growth of new energy vehicles and the competition of intelligent and comfortable configurations will greatly drive the sales of micromotors.
At present, China is a big country in the manufacture of micromotors, but due to the wide and scattered application fields of micromotors, the market concentration is low, and the mid-to-high-end market is mainly occupied by foreign brands. According to HTF statistics, in 2019, Johnson Electric Holdings had a market share of about 7-9% in the field of automotive micro motors, making it one of the top 10 automotive micro motor manufacturers in the world.
From the perspective of the competition situation of the downstream new energy vehicle industry, in the absence of leapfrog improvement in battery technology and intelligent driving technology, "working hard" on intelligence and comfort has become the choice of many car companies. While the sales of micro motors are expected to grow, the pressure of car companies to reduce prices is transmitted to the upstream of the industrial chain.
In recent years, Johnson has taken advantage of industrial development opportunities and acquired overseas companies to lay out the global market for many times. In 2022, Johnson will spend about 702KRW 7.1 billion acquired the remaining 20% stake in Halla Stetech, which focuses on manufacturing powdered metal components specifically for automotive suspension systems, steering, braking systems, and powertrain systems, which can provide higher energy efficiency and performance for electric vehiclesIn the same year, the company also acquired an 80% stake in Pendix GmbH, a German manufacturer of electric drives and electric bicycles, to expand the electric bicycle market.
Under the multiple driving forces, the automotive micro-motor track still has the investment attribute of long slopes and thick snow. In addition to the good news brought by the high prosperity of new energy vehicles, the company's strong growth in overseas markets partially offset the risk of downturn in the domestic market. From the perspective of market valuation, the current company's price-to-earnings ratio is about 686, still at a relatively low level in the past five years, it is no wonder that Johnson Electric's stock price performance can "stand out".