According to the “New Energy Vehicle Industry Development Plan (2021-2035)” (hereinafter referred to as the “Plan”), by 2035, the penetration rate of new energy vehicles in my country will reach 50%, which will drive the demand for related industries. Among them, automotive lightweight and integrated die-casting are important ways to reduce energy consumption and improve battery life. It is expected that the market demand for automotive lightweight and integrated die-casting will continue to grow driven by demand.
As a leading domestic aluminum die-casting enterprise, Wencan Group Co., Ltd. (stock abbreviation: Wencan shares; stock code: 603348) has seized market opportunities under the background of lightweight automobiles and an increase in integrated penetration rate year by year. Competitive advantage in the field of die casting of components, which in turn makes the company’s profitability continue to increase.
The trend of automotive lightweighting has been determined
The “Plan” pointed out that China, Europe and other world-leading economies took the impact of the epidemic as an opportunity for transformation to open an era of green recovery, set green recovery as the main theme, and take a firmer pace towards carbon peaking and carbon neutrality. Driven by the pressure of energy conservation and emission reduction and the need to improve the performance of new energy vehicles, vehicle lightweighting is accelerating.
Driven by factors such as the tightening of fuel consumption standards for fuel vehicles, the increase in the subsidy threshold for electric vehicles, and the pressure of new energy credits, vehicle and component manufacturers urgently need new technical paths to reduce consumption and save energy. As one of the most important application fields of die-casting products, with the increasing emphasis on automobile energy saving and environmental protection, the automobile industry presents a trend of replacing steel and iron with aluminum.
At present, a large number of precision die-casting aluminum parts are used in electronic control systems such as automobile engines and gearboxes. The demand for auto parts will greatly affect the overall development prospects of the die-casting industry. At present, the global automotive aluminum alloy die casting market is showing a rapid development trend as a whole, and the demand for aluminum alloy die castings in the automotive industry will continue to grow in the future.
With the development of the global economy, the demand for precision die castings in many fields such as automobiles, communication infrastructure equipment, household appliances, and medical equipment has steadily increased, and the market maturity of die castings in developed countries is relatively high. As more and more high-end manufacturing industries transfer their production capacity to China, China’s die-casting industry is also continuing to upgrade its structure in the process of growth, and the proportion of precision die-casting parts is gradually increasing.
Aluminum alloy die castings are mainly used in three fields: power system, chassis system and body. According to the data of the International Aluminum Association, the current penetration rate of aluminum alloy body structures in traditional fuel vehicles is 3%, and the penetration rate in pure electric vehicles reaches 3%. 8%. Compared with the aluminum penetration rate of the power system as high as 90%, the lightweight parts of the body structure and the chassis are a rare blue ocean market in the aluminum alloy die-casting industry.
As a leading enterprise in die-casting technology in China, Wencan Co., Ltd. took the lead in deploying new energy. Since 2014, the company has gradually expanded to new energy customers such as Tesla. In 2019, the four major domestic production bases have formed product production with new energy vehicle parts as the core System and production technology are complete, the company is deeply engaged in high-pressure casting, masters gravity casting and low-pressure casting technology, and takes the lead in laying out integrated die-casting technology, which is widely recognized by customers in the industry.
Industry-leading die casting technology
Wencan Co., Ltd., as the earliest enterprise in China to research and use vacuum high pressure casting process to produce aluminum alloy, is a leading enterprise in mass production of aluminum alloy body structural parts in China, and its products basically cover all aluminum alloy body structural parts. The 10-year accumulation of body parts has enabled the company to have strong technical reserves in the mold, material and die-casting process of aluminum die-casting body parts and experience in mass production of more than 200 aluminum alloy body structural parts.
Integrated die-casting is a larger and more integrated body part, so years of experience in aluminum die-casting of large-scale body parts have laid the foundation for the company to upgrade integrated die-casting. The mechanical properties of the company’s die castings reach tensile strength of 315MPa, yield strength of 204MPa, elongation after fracture of 8.5%, minimum wall thickness of 1.3mm, and maximum size of 1400mm × 510mm × 350mm. Large, complex, thin-walled integration and lightweight Quantitative manufacturing, the company is 4-5 years ahead of its domestic counterparts in technology.
In addition, the aluminum alloy body structure has extremely high requirements on strength, elongation, and weldability due to its role in supporting and impact resistance to the car. The material preparation and die-casting are very difficult. , there are almost no domestic participants.
Wencan Co., Ltd. has been developing and improving high-vacuum die-casting technology for many years, mold technology for high-vacuum die-casting, special material development or preparation technology and related production technology. The series of aluminum alloy body structural parts developed and mass-produced by the company are relatively complete and comprehensive, and have obvious leading advantages in aluminum die-casting body parts.
The company has been preparing for integrated die-casting since 2020, and has advantages in materials, molds, die-casting processes, and die-casting equipment. In terms of molds, the company has a mold company. Previously, all the molds for body parts were designed and manufactured independently. It is one of the few automotive aluminum alloy die-casting enterprises in China that has the ability to self-produce large and complex molds. In terms of material processing, the company has jointly developed heat-free aluminum alloy materials with suppliers. The company has mastered the formula and composition requirements of the whole process, and the materials are exclusive.
At present, in the high-vacuum die-casting process, Wencan adopts high-vacuum die-casting technology to produce body structural parts. This technology enables the vacuum degree of the cavity to be below 30 mbar, which better improves the mechanical properties of the material. At the same time, the company continues to update its die-casting equipment. In August 2021, the company and LK Technology held a signing ceremony for a 9000T super die-casting unit at the Yixing plant. The delivery will be completed by the end of February 2022, helping the company to produce large-scale integrated body structural parts.
Full release of performance flexibility
Relying on its comprehensive advantages in technology research and development, product quality management, etc., Wencan Co., Ltd. has established stable cooperative relations with well-known domestic and foreign automobile manufacturers and first-class parts suppliers, including Volkswagen, Mercedes-Benz, BMW, Audi and other internationally renowned OEMs, Tesla, NIO, Xpeng Motors and other new energy vehicle manufacturers, BYD, Geely and other domestic well-known OEMs, as well as ZF, Bosch, Magna and other world-renowned first-class auto parts suppliers business.
As of June 2021, Wencan’s new energy vehicle products performed well, and new energy vehicle customers contributed 268.4906 million yuan in revenue in the first half of 2021, accounting for 13.33% of the main business income, a year-on-year increase of 165.98%. In the first half of 2021, body structure products contributed 242.7583 million yuan in revenue, accounting for 12.06% of the main business revenue, a year-on-year increase of 82.54%.
At the same time, the company continues to improve its competitive advantage in the field of auto parts die-casting. While consolidating the advantages of existing customer resources, it continues to develop high-quality customer groups with high quality and great development potential, and develop new products according to customer needs. And signed a “Strategic Cooperation Agreement” with LK Technology to purchase 7 large-scale die-casting machines including 6000T for R&D and production of body structural parts, integrated battery box trays, motor casings, gearbox casings, etc. A total of 2 die-casting machines of 6000T and 4500T models have passed the company’s pre-acceptance.
New domestic auto companies have deployed integrated die-casting processes. Considering the large initial investment in integrated die-casting and the high process barriers, according to industry research, most OEMs choose to outsource them to professional aluminum die-casting suppliers, while Wen Can Relying on the core technology of leading peers, the company continues to update production equipment to develop new products. It is the absolute leader in the field of aluminum die-casting body parts, and will lead its peers to obtain “new forces” integrated die-casting orders.
In 2021, the industry will be under pressure due to the impact of multiple unfavorable factors such as lack of cores, sharp rise in aluminum prices, repeated overseas epidemics, and shipping costs, but Wencan has withstood the pressure and achieved rapid growth in operations. The data shows that the revenue in the first three quarters of 2021 is 2.97 billion yuan, a year-on-year increase of 103.6%, showing full resilience.
According to agency forecasts, the average net profit of Wencan in 2021 will be 98.200 million yuan, a year-on-year increase of 17.18%. In 2022, with the expansion of the four major new energy businesses of body-integrated die-casting, chassis, junior power, and battery trays/energy storage boxes, the company’s performance will release greater flexibility and usher in an operating inflection point.
According to relevant data estimates, the market space for aluminum alloy die castings for passenger vehicles in China will reach 163.714 billion yuan in 2025, and the compound growth rate of the market space from 2020 to 2025 will be about 11.2%. In 2022, the aluminum price will fall from a high level. With the optimization of business structure and the release of scale effect, the company’s gross profit margin level will be significantly improved, and its performance is expected to continue to grow.