Juhua Technology: Powerful competitors for smart meters

At the beginning of its establishment, Zilver Technologies (300360, SZ), which entered into the electric energy meter market by way of ODM OEM, continuously improved its strength through technological research and development. With the implementation of the centralized procurement model of the State Grid, Juhua Technologies, which possesses technology and product influence, has begun to focus on the construction of independent brands, and the products have quickly entered the national grid bidding project. Today, the proportion of the revenue generated by the independent brands of Juhua Technology has far surpassed that of the ODM business, achieving a magnificent turnaround.

In recent years, the national grid bidding has played an obvious role in promoting the smart meter industry. However, with the completion of the 2014 full-coverage plan, the future market growth point has become the focus of investors. In response, industry insiders pointed out to the reporter of “Daily Economic News” that with the imminent arrival of smart meters and the transformation of rural power grids, there will be no rapid decline in demand for smart meters and a smooth transition will be achieved.

The prospectus shows that the IPO of Juhua Technology intends to raise approximately RMB 208 million, mainly investing in the upgrade project of an annual output of 6 million sets of smart meter and electricity information collection system products and its technology R&D center.

After the above projects are fully put into production, the total capacity of the company's smart meters and electricity information acquisition systems will reach 6 million units, more than double the current annual production capacity of 2.8 million units.

From ODM to its own brand gorgeous turn to be located in Yuhang District of Hangzhou Yuhua Technology, is a professional engaged in electric energy metering and electricity information acquisition system product development, production and sales business. Its products mainly serve domestic power users and non-power users such as the State Grid, China Southern Power Grid and provincial network companies, and cover electricity meter and power consumption information collection system products.

However, at the beginning of its establishment, Juhua Technology did not create its own brand, but instead provided domestic manufacturers with modules and semi-finished products for electric energy meters in the form of ODM. The prospectus shows that as the products are widely promoted and applied, the company’s own technological advantages have become increasingly prominent. At present, the company has a number of patents, and participated in the drafting and revision of a number of energy metering standards. In 2006, Juhua Technology began to create its own brand.

According to the Rituals Technology Prospectus, the company's industry is an important part of the “market-oriented energy-saving and environmental protection service system” in the “energy-saving and environmental protection industry” strategy, and it is also the “intelligent transformation of important infrastructure” in the “new-generation information technology industry”. The components are the key areas for the country to achieve rapid and healthy development in the future.

According to the "Twelfth Five-Year" development plan for the power industry, it is expected that by 2015, the country's installed power generation capacity will reach 1.437 billion kilowatts. With the overall advancement of the global smart grid construction and the transformation of power grids, the international and domestic smart meter markets are facing enormous potential for development.

According to statistics, in the second half of 2009, the State Grid Corporation of China, which has dominated the domestic power supply market, changed the power meter procurement model. It was changed from the original independent provincial bidding of the provincial companies to the centralized bidding of the State Grid Corporation, and at the same time, the qualification of participating companies Make clear requirements. Tianxiang Investment Gu Yanbao pointed out that decentralized bidding has led to a self-contained system for smart metering, and the differentiation is obvious. At the same time, the scale of purchase is small and price fluctuations are large. Therefore, it is difficult for national brand enterprises to timely respond to changes in demand, and it is difficult to achieve scale advantages. It appears; and unified bidding effectively harmonizes standards and is conducive to the development of advantageous enterprises.

According to the statistics of the IPO prospectus published by the China Instrument Industry Association, according to the statistics of the Electrical Instrumentation Subcommittee of the China Instrument Industry Association, during the four national network tenders from 2009 to 2011, the total number of bids won by the company was 126,100 units, 819,900 units, and 966,600 units respectively. Taiwan, the number of bids after the unified bidding has increased significantly.

With the continuous expansion of product bids, the influence of the independent brands of Juhua Technologies gradually emerged. According to the data, in 2010, Juhua's independent brands and ODM accounted for 48.34% and 51.66% of the company's operating revenue respectively. By 2012, the proportion of self-owned brands reversed to 63.98%, which dominated the market; the proportion of self-owned brands in the middle of 2013 was 66.36%.

At the same time, the gross profit rate of 41.61% of its own brands is far higher than that of ODM's business, which is 33.49%, which has boosted the rapid growth of its business. From 2010 to 2012 and from January to June 2013, the company's operating income was 287 million yuan, 488 million yuan, 718 million yuan, and 346 million yuan; net profit reached 33,216,400 yuan, 75,798,100 yuan, 134 million yuan, and 8,179.82 respectively. Ten thousand yuan.

Market share needs to be improved Yesterday (January 2nd), a power equipment industry professional told the “Daily Economic News” reporter that smart meters were generally divided into single-phase smart meters and three-phase smart meters. The single-phase electricity meter only samples and measures the single-phase voltage and current, and is currently mainly used in households in the country and belongs to civilian electricity meters. The three-phase electricity meter samples and measures multi-phase voltage and current, and measures the amount of reactive power and monitoring. The current balance rate, phase-failure recording, and perfect load recording are currently used mainly in the industry. The technical content is higher, and the price and gross profit rate are also higher than single-phase electricity meters.

The Jhwa Technology prospectus shows that the average sales price of the company's three-phase smart meters was 349 yuan per unit from January to June 2013, which was much higher than the 128.74 yuan per unit of single-phase smart meters; and that of three-phase smart meters was 37.57%. The interest rate is also higher than the 31.19% of single-phase smart meters. From 2009 to 2011, the number of successful three-phase smart meters for the company’s leading products was 21,100 units, 329,700 units and 309,700 units respectively.

Although the number of successful bids for three-phase smart meters has increased significantly in recent years, compared with the competitors, the industry position of Juhua still needs to be improved. According to statistics from Essence Securities, the top five bid winners of the first-level three-phase smart meters were Linyang Electronics (601222, SH) and Weisheng Group (03393, HK). ), Holley Instruments, Juhua Technology, and Samsung Electric (601567, SH); and in 2012, the top five bidders became Linyang Electronics, VIA Group, Samsung Electronics, Holley Instruments, and Haixing Power. No name on the list.

The "Daily Economic News" reporter called Linyang Electronics as an investor. The staff said that the market for smart meters is currently fiercely competitive. Although the company ranks top, the overall share of the top few has declined. However, the company is relatively mature from technology to business and does not worry about market status.

An analyst who declined to be named stated that both Lin Yang Electronics and Samsung Electric are in the leading position in the industry, but the smart meter market is very fragmented and there will be no single dominant situation. The top five companies will each have their own share. About 8%.

From the perspective of operating data, Linyang Electronics' operating revenue and net profit in 2012 were 1.91 billion yuan and 303 million yuan respectively, and in mid-2013 were 761 million yuan and 117 million yuan respectively; Samsung Electric's 2012 operating income and net profit were respectively 2.56 billion yuan and 264 million yuan. In the middle of 2013, they were 958 million yuan and 84.08 million yuan respectively. From this point of view, there is still a certain gap between the Juhua technology and the leading position in the industry.

Industry demand will be a smooth transition The above-mentioned power equipment industry sources stated that with the increasing demand of ordinary residents for electrical equipment, single-phase power supply may not be able to meet user needs in the future, and three-phase energy meters will gradually expand from industrial applications to civilian applications. . However, this trend is not achievable in a short time, at least from the current national grid tendering situation, or concentrated in a single-phase smart meter.

According to the tender data of the State Grid, the number of tenders for Class 2 single-phase smart watches in recent years was 41.49 million sets, 54.38 million sets and 7.04 million sets respectively, accounting for 91.4%, 90.9% and 92.1% of the total tenders for smart meters that year.

According to the "12th Five-Year Plan" of the Smart Grid formulated by the State Grid, the total installed amount of domestic smart meters was about 230 million during the 12th Five-Year Plan period; the progress of smart meter coverage was 15% from 2010 to 2014. , 35%, 65%, 90% and 100%. Does this progress mean that the market space for smart meters will shrink sharply in 2015, and the performance of related companies will not be seriously affected?

"It should be said that there will be a certain decline in the overall number, but the rate will not be great." Lin Yang Electronics related sources said that because there is a replacement demand.

Anxin Securities analyst Su Wangxing also holds the same view in the research report. He believes that the precision of smart meters is relatively high, so it is reasonable to use them for 5 years. The first batch of smart meters that began to be widely promoted in 2010 will face the need for replacement by 2015, and the amount of replacement will be proportional to the amount of previous installations, so the market demand still exists.

The above-mentioned analysts who do not wish to be named believe that in addition to replacing the demand, there is also a need for the transformation of rural power grids. “At that time, the time for drawing up the plan was earlier, and the main target was the construction of the urban network. In early 2013, the bidding plan for the rural network was to invite 230 million to 250 million in the next three years. This demand is still present, so the demand for smart meters is in the market. There will not be a large-scale decline, but the scale of tendering may not increase much in the future."

Fundraising increased the number of single-phase energy meter investment into Juhua Technology's IPO to raise about RMB 208 million, including investing RMB 1.7 billion in annual production of 6 million smart meter and electricity information collection system products, investing in smart meters and electricity The product upgrading project of the information acquisition system product technology research and development center was 31 million yuan.

According to the company’s plan, after the above projects are fully completed, the company’s annual capacity for three-phase smart meters will increase by 800,000 units, the annual production capacity of single-phase smart meters will increase by 2.8 million units, and the annual production capacity of electricity information acquisition systems will increase by 400,000 units. The total production capacity will reach 6 million units, which is significantly higher than the current annual production capacity of 2.8 million units.

Juhua technology uses order production methods, so the production and sales rate is always at a high level. In 2012, the company's production and sales rates for three-phase energy meter, single-phase energy meter and electricity consumption information collection system products were 99.53%, 94.84% and 95.70%, respectively. By mid-2013, the production and sales ratio of three-phase energy meters rose to 104.95%.

The prospectus shows that with the completion of the fund-raising project, the development of the company's single-phase energy meter business will be greatly improved, thus more in line with the demand structure of the electric energy meter.

It is worth noting that the "Smart Meter Construction" of the investment project of Linhua Electronics, the competitor of the company, has reached an annual production capacity of 7.7 million units for single-phase smart watches and 800,000 units for three-phase smart watches, and Samsung Electric The fundraising project will also increase the annual production capacity of 6 million single-phase smart meters and 500,000 three-phase smart meters.