Zhejiang Jiecang Linear Motion Technology (603583) 市值风云·2024-08-13 01:37Company Overview - The company, Jiecang Linear Motion Technology (603583 SH), specializes in linear drive systems, primarily focusing on ODM business with overseas leading brands as its main customers [3] - Historically, over 70% of its revenue comes from overseas markets, with domestic sales accounting for 29% in 2023 [3] - The company has maintained a CAGR of 22% in revenue from 2018 to 2023, with significant growth during the pandemic due to increased demand for smart desks [4] Financial Performance - Revenue in Q1 2024 increased by 32 5% YoY, showing signs of recovery after a period of stagnation [5] - From 2018 to 2022, the company's gross margin dropped from 42 1% to 26 9%, and net margin fell from over 20% to around 10% [10] - In Q1 2024, the gross margin improved to 30%, and the net margin was 9 8% [10] - The company's revenue growth is primarily driven by increased sales volume, while the average selling price has declined [9] Market and Industry - The global market size for linear drive products is estimated to be in the tens of billions, with significant growth potential in smart office applications [2] - The penetration rate of linear drive products in the smart office sector is still relatively low, indicating room for expansion [2] - The company faces challenges in both domestic and international markets, including US tariffs and intense competition in China [17] International Expansion - The company has strengthened its presence in Europe through acquisitions and capacity expansion, with Europe's revenue share increasing from 11% in 2020 to 21% in 2022 [19][20] - In 2021, the company acquired Logic Endeavor Group GmbH (LEG) in Austria for 79 18 million euros, aiming to enhance its brand image and market share in Europe [19] - The company is investing in a logistics and production base in Hungary, with a planned capacity of 500,000 office drive systems and 150,000 medical drive systems annually [20] R&D and Innovation - The company maintains a high R&D intensity, with R&D expenses accounting for around 7% of revenue, leading its peers [24] - As of 2023, the company holds 916 authorized patents, including 175 invention patents [25] - The company's founder, Hu Renchang, has a strong technical background and has led the development of key products, contributing to the company's competitive edge [27] Financial Health and Shareholder Returns - The company's free cash flow has been volatile, with cumulative free cash flow of 100 million yuan since 2018 [36] - The company has a dividend payout ratio of 32 6%, with cumulative dividends of 570 million yuan since its IPO [42] - As of Q1 2024, the company's interest-bearing liabilities stood at 1 15 billion yuan, with a debt-to-asset ratio of 33 8% [39][42] Recent Developments - The company plans to purchase office and residential properties from its parent company, Jiecang Holding, for 85 27 million yuan, aiming to improve employee accommodation and office conditions [45] - Jiecang Holding, the parent company, has been operating at a loss, with a debt-to-asset ratio of 77 7% as of June 2024 [46]