Buyang International Holdings Limited (hereinafter referred to as 'Buyang International') successfully listed on December 15, 2022. The company plans to issue 250 million H shares, of which 90% will be international offerings and 10% will be public offerings. The issue price per share is HK$0.60.
During the process of listing in Hong Kong this time, Frost & Sullivan mainly undertook the following tasks: helping the issuer accurately and objectively understand its positioning in the target market, using objective market data to discover, support, and highlight the issuer's competitive advantages, assisting the issuer, investment banks, and other intermediaries in completing the relevant parts of the prospectus (such as overview, competitive advantages and strategy, industry overview, business, and other important chapters), helping the issuer complete communication with the Hong Kong Stock Exchange and investors, assisting investors in quickly understanding the market ecosystem and competitive landscape, and assisting the issuer in completing feedback on various industry-related issues from the Hong Kong Stock Exchange.
Investment highlights
The company is a leading manufacturer of automotive aluminum alloy wheels;
The company continues to provide high-quality aluminum alloy wheel hubs for customers in the developed automotive aftermarket such as Europe and America;
The company has a profound foundation in manufacturing engineering technology and industry-leading large-scale operational capabilities;
The company has strategic synergies with highly trusted industrial partners that drive industry development;
The company has a management team that shares a common mission and is highly visionary.
According to the Frost & Sullivan report, in terms of the export value of aluminum alloy turbines in 2021, the company:
It accounts for about 1.0% of the China aluminum alloy turbine market, ranking nineteenth.
Global Automotive Market Overview
Affected by the slowdown in global macroeconomic growth and declining consumer demand, global automobile production and sales have declined for several consecutive years. The COVID-19 pandemic that began in 2020 cast a new shadow over the global automotive industry, with global automobile production and sales falling to lows of 7.63 million units and 7.71 million units respectively in that year. However, entering 2021, with the gradual popularization of vaccines globally and the relaxation of epidemic prevention measures, global automobile production recovered to 7.91 million units, a year-on-year increase of 3.6%.
In the future, as the novel coronavirus gradually weakens, prevention and control measures in various countries are expected to be further relaxed. Against this backdrop, consumer confidence is expected to recover, and automobile consumption demand will also revive. It is projected that global automobile production will maintain a recovery trend from 2022 to 2026, reaching 97.6 million vehicles by 2026, with a compound annual growth rate of 4.3% from 2021 to 2026.
On the other hand, against the backdrop of gradually recovering automobile production and sales, the global automobile ownership is expected to continue growing. In 2021, the global automobile ownership had reached 15.265 million vehicles, and it is projected that by 2026, it will reach 16.499 million vehicles, achieving an average annual compound growth rate of 1.9% compared to 2021.
Data source: Analysis by Frost & Sullivan
According to the Frost & Sullivan report, the macro trends in the global automotive market mainly include: 1) The rapid expansion of new energy vehicle sales and ownership volumes driven by favorable policies introduced in major economies, leading to an increase in penetration rates; 2) Intelligent connected vehicles becoming a new growth opportunity for the automotive industry; 3) Automotive lightweighting has become an important means of energy conservation, emission reduction, and efficiency improvement, with the lightweighting of vehicles highly dependent on the widespread application of new materials such as high-strength steel, aluminum alloy, and magnesium alloy in key components like body frames and wheels.
Overview of the Aluminum Alloy Steam Turbine Market
An aluminum alloy automobile wheel refers to the automotive hub made with aluminum alloy as the core raw material. As one of the key components of a car, the quality and performance of the hub directly affect the safety, rangeability, and other capabilities of the vehicle.
Compared to steel wheels, aluminum alloy wheels have significant advantages: 1) They are more lightweight, reducing fuel consumption or the power consumption of new energy vehicles and improving range; 2) They have excellent heat dissipation performance; 3) They have good shock resistance and a comfortable driving experience. Aluminum alloy steam turbines have quickly taken over the market with their obvious advantages. Currently, calculated by sales volume, aluminum alloy steam turbines account for more than 70% of the overall steam turbine market.
According to a Frost & Sullivan report, since 2020, affected by the pandemic, global automobile production has declined significantly and people's car travel has decreased noticeably, directly impacting the demand for steam turbines and aluminum alloy steam turbines in both the OEM (Original Equipment Manufacturer) and aftermarket markets. In 2021, global aluminum alloy steam turbine sales were reduced to 3.525 billion units, showing an average annual decline of 4.2% from 2017 to 2021. In the future, as the global automobile market recovers, both automobile sales and ownership will continue to grow. It is expected that the demand for aluminum alloy steam turbines in both the OEM and aftermarket sectors will warm up. By 2026, global aluminum alloy steam turbine sales are expected to reach 4.404 billion units, achieving an average annual compound growth rate of 4.6% compared to 2021.
Source: Frost & Sullivan report
Market competition pattern of aluminum alloy steam turbine in China
According to a Frost & Sullivan survey, in 2021, there were about 500 to 600 Chinese enterprises with exports of more than 1,000 aluminum alloy turbines, including over 300 aluminum alloy turbine manufacturers and exporters. According to the Frost & Sullivan report, in 2021, among the top twenty Chinese aluminum alloy turbine exporters with exports exceeding 500,000 units, 18 were manufacturers, and the market was dominated by individual large-scale aluminum alloy turbine producers. In 2021, the top ten producers by export volume accounted for a total market share of 47.6%, indicating a relatively concentrated overall market.
In a highly competitive market, most aluminum alloy turbine manufacturers tend to focus on specific customer groups - such as overseas auto aftermarket parts wholesalers or car modification customers - in order to gain development opportunities. According to a Frost & Sullivan report, in 2021, China's top ten exporters accounted for a combined 50% of the market share based on aluminum alloy turbine exports, with Buyang occupying 1% of the market share with an export volume of 2.915 billion yuan, ranking 19th in the Chinese market.
Source: Frost & Sullivan report
China aluminum ingot market price
Aluminum alloy ingots are the main raw material for producing aluminum alloy turbines, and the price of aluminum alloy ingots is highly correlated with the price of aluminum ingots.
In 2015, the price of aluminum ingots in China fell significantly in early summer. The main reason was the obvious overcapacity in the aluminum industry after years of capacity expansion. With supply clearly exceeding demand, the price of aluminum ingots dropped significantly. Since 2016, the Chinese government has implemented supply-side reforms aimed at eliminating overcapacity in high-energy-consuming industries, promptly phasing out unqualified production capacity, and promoting industrial transformation and upgrading. Against this backdrop, the price of aluminum ingots in China rebounded and reached a high of 16,255.0 yuan per ton in October 2017.
Since 2020, the supply-side reform of aluminum ingots has been continuously advancing. Measures to reduce production and quotas on the supply side, as well as the growing demand for aluminum alloys in new energy vehicles and construction sectors, have led to continued tight supply. The price of aluminum ingots has risen all the way and exceeded RMB20,000 per ton. The historical price trend of aluminum ingots is shown in the following chart:
Source: Frost & Sullivan report
Frost & Sullivan has extensive research experience in the automotive and transportation industry, assisting well-known companies in successfully accessing the capital market. Successful listings include: New World Transportation Group (NWTN.NASDAQ), Zhongxin Innovations (3931.HK), Leapmotor (9863.HK), DBS China (2418.HK), KuaiDog Taxi (2246.HK), NIO (NIO.SGX), NIO (9866.HK), Canggang Railway (2169.HK), YGMZ (YGMZ.NASDAQ), Asia Express (8620.HK), InfinityL&T (1442.HK), TOMOHOLDINGS (6928.HK), EH (EH.NASDAQ), Aodima (8418.HK), Xiangxing International (8157.HK), CIMC Vehicles (1839.HK), Xunlong (1930.HK), CSSC Leasing (3877.HK), Chengdu Expressway (1785.HK), Tianrui Automotive Interior (6162.HK), Periphery Holdings (2885.HK), Huazi International (2258.HK), PULIN Chengshan (1809.HK), NIO (NIO.NYSE), Wanli Da (8482.HK), Qilu Expressway (1576.HK), Yingheng Technology (1760.HK), Asia Industry (1737.HK), Ruifeng Power (2025.HK), Gaomeng Technology (8065.HK), Hebei Yichen (1596.HK), Zhengli Holdings (8283.HK), Junghao Holdings (8035.HK), Yade Group (1585.HK), Yihai Car Rental (EHIC.NYSE), Xincheng Power (1148.HK), Zhengxing Wheels (ZX.NYSE), Shuanghua Holdings (1241.HK), Changfeng Axles (1039.HK).
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*The above order is not sequential and is arranged in reverse chronological order based on listing time.
