1. Industry chain
Computer numerical control machine tools, or CNC machine tools for short, are a type of automated machine tool equipped with programs. The control system can logically process programs specified by control codes or other symbolic instructions and input them in digitized code form through an information carrier. After processing by the CNC device, various control signals are issued. The machine tool is controlled to automatically process the workpiece into the shape and size required by the drawing. CNC machine tools are a type of automated machine tool equipped with a program control system, generally consisting of an input device, CNC system, servo system, measurement system, and machine tool body. In recent years, China’s domestic brands of CNC machine tools have emerged, with huge market demand, which has attracted many international brands of CNC machine tool companies to enter and seize the Chinese market.
From the perspective of the industrial chain, the upstream of the CNC machine tool industry chain is mainly divided into four parts: CNC technology, main components of CNC machine tools, electrical components, and CNC systems. The downstream is the application field of CNC machine tools, mainly used in engineering machinery, automobile manufacturing, shipbuilding, rail transportation, aerospace, petrochemicals, and other industries.
2. Upstream industry analysis
Bearing is an essential component in CNC machine tool equipment; its primary function is to support the rotating body of the machinery, reduce the friction coefficient during its motion, and ensure its rotational accuracy. Data shows that in 2021, China’s bearing production reached 23.3 billion sets, an increase of 32.7% compared to the same period in 2020.
A sensor is a detection device that can sense the measured information and transform it into an electrical signal or other required form of information output according to a certain rule to meet the requirements of information transmission, processing, storage, display, recording, and control. Data shows that the size of China’s sensor market increased from 169.1 billion RMB in 2017 to 251.0 billion RMB in 2020, with a compound annual growth rate of 14.1%. In 2021, the market size reached 295.1 billion RMB. With the continuous progress of society, the sensor industry is increasingly valued with the empowerment of the Internet.
3. Midstream industry analysis
3.1 CNC machine tools
In recent years, China’s CNC machine tool industry has developed rapidly with the support of favorable government policies and the pursuit of innovation by enterprises. According to data, the size of China’s CNC machine tool industry reached 327 billion RMB in 2019. Due to the impact of the pandemic and energy supply restrictions, the market size of China’s CNC machine tool industry slightly decreased in 2020, with a market size of 247.3 billion RMB, a year-on-year decrease of 24.4%. In 2021, the market size of China’s CNC machine tool industry has recovered and reached 268.7 billion RMB.
From the perspective of product distribution, the scale of CNC metal cutting machine tools in China is relatively large, accounting for more than 50% of the overall scale of the CNC machine tool industry. The second largest category is CNC metal-forming machine tools, which account for nearly 30% of the overall industry scale. Metal cutting machine tools are machines that use cutting methods to process metal blanks into machine parts. Data shows that in 2020, China’s metal-cutting machine tool production reached 446,000 units, a year-on-year increase of 5.9%. In 2021, China’s metal-cutting machine tool production reached 602,000 units, a year-on-year increase of 29.2%.
Metal forming machine tools generally refer to forging and pressing equipment, which is a type of mechanical equipment used for shaping and separating in forging and pressing processes, mainly by applying pressure to the metal to shape it. Data shows that in 2021, China’s metal-forming machine tool production reached 210,000 units, a year-on-year increase of 0.5%.
3.2 Major companies
Create Century Intelligent Equipment Group, Shenyang Machine Tool, and Haitian Precision Machinery are the leading listed companies in China’s CNC machine tool industry. From the revenue of CNC machine tools of these three companies from 2019 to 2021, the overall trend of their revenue has been on the rise. In 2021, Create Century, Shenyang Machine Tool, and Haitian Precision Machinery had CNC machine tool revenues of 5.123 billion RMB, 1.082 billion RMB, and 2.679 billion RMB, respectively. They each accounted for more than 50% of their total revenue, indicating that the CNC machine tool business is the main business of the three companies.
Comparing the gross profit margin of CNC machine tools for the three companies from 2019 to 2021, the gross profit margin of this business for all three companies has shown an overall upward trend. Shenyang Machine Tool’s gross profit margin increased from -135% in 2019 to 6.61% in 2021, which turned from negative to positive. In 2021, the gross profit margins for the CNC machine tool business of Create Century Intelligent Equipment Group, Shenyang Machine Tool, and Haitian Precision Machinery were 29.97%, 6.61%, and 25.50%, respectively.
4. Downstream industry analysis
Construction machinery is an essential component of the equipment industry, which can be divided into excavating machinery, earthmoving and transportation machinery, construction lifting machinery, and industrial vehicles, among which excavators, loaders, and cranes are the main equipment. In recent years, the revenue of China’s construction machinery industry has steadily increased. In 2017, the revenue of China’s construction machinery industry exceeded 500 billion RMB, approaching 600 billion RMB in 2018, exceeded 700 billion RMB in 2020, and reached 800 billion RMB for the first time in 2021.
From 2017 to 2021, the total sales of automobiles in China have continued to decrease, from 28.879 million vehicles in 2017 to 23.489 million vehicles in 2021. However, with the development of China’s new energy vehicle industry, the sales of new energy vehicles in China have continued to rise. Although new energy vehicles have put forward new requirements for parts, they have also brought new demands and opened new application areas for developing CNC machine tools.
Source from Intelligence Research Group (chyxx.com)