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Monday, 12/13/2021 10:02:50 AM

Monday, December 13, 2021 10:02:50 AM

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Grasping ESG investment trends, Zhuyou Intelligent Manufacturing Technology (0726.HK) highlights its sustainable development capabilities.


December 10, 2021 19:01 Gelonghui APP

In the context of my country’s economy shifting from rapid development to high-quality development, more and more visionary people are beginning to agree that only achieving sustainable development of the economy, society, environment, and enterprises can achieve the Pareto’s best. Excellent solution.

On December 10, 2021, Gelonghui "The 3rd Greater China Best Listed Company Award Ceremony" was held in Shenzhen. Zhuyou Intelligent Manufacturing Technology won the "Best Sustainable Development Company" award for its outstanding performance in ESG. The current ESG performance has gradually become an important factor for professional investors to measure the investment value of listed companies. May wish to take this opportunity to take a closer look at why Zhuyou Zhizao Technology has won this award.

Carbon neutrality is the greatest certainty of the ESG concept, and prefabricated buildings benefit first.

First of all, it needs to be clear that ESG is a very broad concept, and it is a new value concept that focuses on the environment, society, and corporate governance performance. It emerged in Europe in the last century. As my country's capital market gradually improved, it began to affect my country's market. Since the beginning of this year, the tightening of regulatory policies in education, Internet, gaming and other industries has been affected by related factors, and the final effect on the capital market is also obvious to all.

It is worth mentioning that due to differences in history, culture, and systems between the East and the West, the understanding of Chinese and foreign investors is different in terms of specific performance, especially in social and corporate governance. For example, China is more concerned about Whether it meets the major premise of "common prosperity", the West is more concerned about ethnic diversity.

But for the environment, the two sides have the greatest consensus, and "carbon neutrality" is precisely the concentrated expression of this consensus. Therefore, for Hong Kong stocks, a market where domestic and foreign capital are equally important, carbon neutral concept stocks can be favored by the most ESG funds in the market, and they also have more room for valuation improvement.

Carbon neutrality involves a wide range of industries, but the construction industry should undoubtedly be the first to be worthy of attention. According to the "China Building Energy Conservation Annual Development Report 2020", the total carbon emissions of the construction industry in the entire process reached 4.93 billion tons of carbon dioxide, accounting for 51.3% of the country's carbon emissions. If such an ultra-high energy consumption industry achieves the development of low energy consumption or even net zero energy consumption, it will be of great significance to the completion of my country's carbon neutral plan.

The prefabricated building is precisely the necessary carrier for building carbon neutrality. It processes the components in the factory and then takes them to the construction site for assembly, which greatly reduces material consumption and waste generation, which is in line with the general direction of the construction industry's transformation to modernization and cleanliness. According to data from Northeast Securities, prefabricated buildings can reduce carbon emissions by 25KG per square meter compared to cast-in-place buildings.

At present, the penetration rate of prefabricated buildings in my country is only 20%, and the data in developed countries such as the United States, Japan, and France all exceed 80%. In contrast, prefabricated buildings in my country still have broad room for improvement. According to the national plan, the proportion of prefabricated buildings in my country will reach 30%.

Judging from the current types of prefabricated buildings, the proportion of concrete structures has continued to increase. As its cost further drops, the share of concrete structures is expected to increase further. As one of the main players of PC components (concrete components) in China, Zhuyou Intelligent Manufacturing Technology is benefiting from the core target of the development of prefabricated buildings. In the first half of this year, its PC component revenue increased by 26.4% year-on-year, and its sales contract value soared by 369.5% year-on-year.

It should be noted that the huge market increment space has also attracted many competitors, which is also necessary for the healthy development of the industry. To obtain the long-term maximum industry dividend and achieve growth, the company needs to continue to build its core competitiveness.

Conform to the trend of digital intelligence, actively research and develop to consolidate the advantages of the entire industry chain.

From a long-term perspective, as the production capacity on the supply side continues to increase, industry competition is intensified. According to the law of manufacturing development, the period of stock competition is when cost and efficiency are compared. For companies with a single business development, there is profitability. Limited possibilities.

In view of this, Zhuyou Zhizao Technology has chosen the entire industry chain layout from the beginning, covering multiple types of businesses such as design, component manufacturing, decoration, and gardening. Diversified business layout is conducive to the steady growth of the company's long-term performance. More importantly, opening up the upstream and downstream information links enables a single project to start from the overall perspective, improve the degree of standardization, and achieve the purpose of reducing costs and increasing efficiency.

To continuously consolidate and give full play to the advantages of the entire industry chain, the first thing is to continuously improve the company's entire industry chain research and development level, which is another major advantage of Zhuyou Intelligent Manufacturing Technology. It can be seen that Zhuyou Intelligent Manufacturing Technology has completely independent intellectual property rights in the six major building industrialization technology systems, including
architectural design,
intelligent manufacturing,
on-site assembly,
new materials, and
building information.

As of October 31, 2021 , It has applied for 1887 patents and 1288 authorized patents, ranking first in the industry in terms of number.

Focusing on the continuous research and development of the entire industry chain, Zhuyou Smart Manufacturing Technology integrates its own technology-material reduction application and substitution (RIFF system, large-span prestressed laminated board, solid waste material recycling, etc.), advanced equipment production lines, Through the integration of design, manufacturing, and assembly, manufacturing process technology, smart construction, assembly-style decoration, and digital-intelligence management platform, etc., solve the problems of coordination and connection between technology chains in the whole process of engineering construction, and form a system-integrated production The operating system provides real estate companies with complete and sustainable green building products (residential, public buildings) that can reduce carbon emissions.

For example, in terms of research and development, the company’s self-developed RIFF structural system can reduce carbon emissions by 52.98-83.57 kg per square meter compared to conventional traditional cast-in-place structural systems; in the production and operation of PC factories, the use of renewable energy and Efficient use of energy, advanced equipment production lines and manufacturing technology, a green PC factory with a construction area of ??about 20,000 square meters, can reduce carbon emissions by 946 tons per year; in the application of green materials, use high-performance materials that can replace cement, Solid waste recycling, concrete composite early-strength and low-energy production technology, each typical component concrete can reduce carbon emissions by 45.16 kg, and explore the promotion of the use of gypsum mortar, A-level thermal insulation and decoration integrated exterior wall panels and ceramic tile dry wall panels, etc. Compared with traditional materials of the same type, carbon emissions can be reduced by 147.7 kg/m2, 1.125 kg/m2 and 84.4 kg/m2 respectively.

These are the results of Zhuyou Intelligent Manufacturing Technology actively embracing the development direction of the industry and insisting on the development of digital intelligence.

For a long time, my country's construction industry has been in a state of large but not strong, with problems such as low design level, backward organization, disconnected industrial chain links, and fierce low-level competition, which have affected the profitability of enterprises. In the context of the current economic dominance of the information industry, the construction industry, a pillar industry with an output value of ten trillion yuan, will inevitably move towards digital and intelligent transformation.

This is also the logic behind the continuous investment in R&D and innovation of Zhuyou Intelligent Manufacturing Technology, a pioneer in the industry. The sub-projects of the "13th Five-Year" national key R&D plan that he is responsible for have passed the acceptance of the expert group. The flexible manufacturing technology of components can increase the production capacity by more than 30%. The research and development of the intelligent factory digital intelligent management platform can help control the factory data and improve efficient. Through the extensive application of the digital intelligence platform, Zhuyou Intelligent Manufacturing Technology can better save labor costs, reduce resource consumption, and improve business quality.

Of course, the transformation of digital intelligence requires the joint efforts of the entire industry. Relying on its full production chain advantages, Zhuyou Intelligent Manufacturing Technology is also accelerating the construction of an industry ecosystem platform. In August of this year, Glodon, the leading engineering cost software, invested 288 million Hong Kong dollars to invest in Zhuyou Zhizao Technology, with a shareholding ratio of 9.67%, becoming the company's second largest shareholder. It is foreseeable that the combination of Glodon's digital solutions and the industrialized technology system of Zhuyou Intelligent Manufacturing Technology will not only promote the acceleration of the industry's upgrading and transformation, but also bring more business growth points to the company.

Write at the end
The ESG investment philosophy seems to only consider the value of the company in terms of non-financial factors, but it is not. Companies with higher ESG scores can often obtain better internal and external resources, better innovation capabilities, and higher risk management capabilities, so as to achieve better profitability and lower financing costs, that is, from the non-financial level to the financial level Penetration, which in turn promotes the enhancement of corporate value.

Zhuyou Intelligent Manufacturing Technology takes advantage of the prefabricated building, which is in line with the characteristics of current ESG investment. It combines its own unique advantages and has high long-term performance growth and certainty. However, the current PE valuation of less than 15 times cannot be completely completed. React to this. If you refer to the research report of Anli Securities, based on its performance expectations for Zhuyou Zhizao Technology, it is given 11.6 times PE in 2022, with a target price of 1.5 Hong Kong dollars. Compared with the current stock price, there is more than 70% upside potential.

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