Strong demand for industrial robots has led to a surge in demand for reducers, and the high-end market is expected to open up further

The rapid development of industrial robots and the acceleration of domestic substitution have rapidly boosted the demand for reducers . In the first three quarters of this year, the production and sales of the domestic reducer industry increased, boosting the performance growth of leading companies.

With the advancement of technology, the cost-effectiveness of domestic reducers has become more prominent, and the delivery cycle is shorter. Industry insiders pointed out that although the high-end market such as harmonic reducers is still mainly occupied by foreign brands, there is still enough room for domestic brands to move into the high-end market.

Domestic reducer volume increase

Data shows that in 2021, the total demand for China's industrial robot reducers was 931,100 units, a year-on-year increase of 78.06%. Among them, the incremental demand was 824,100 units, a year-on-year increase of 95.05%; the stock replacement volume was 107,000 units, a year-on-year increase of 6.57%. This growth trend of industrial robots continues this year as demand in industries such as new energy vehicles explodes.

Strong demand for industrial robots has boosted the performance of upstream reducer companies. Shuanghuan Transmission (002472.SZ) recently released its third quarter report. In the first three quarters, the company achieved operating income of 4.825 billion yuan, a year-on-year increase of 18.68%, and realized net profit attributable to shareholders of 379 million yuan after deducting non-recurring items, a year-on-year increase of 100.68%; in the third quarter, the company achieved revenue of 1.728 billion yuan and net profit attributable to shareholders of 159 million yuan, a year-on-year increase of 19.43% and 61.17%, respectively, setting new records for revenue and net profit compared to the second quarter.

Shuanghuan Transmission stated in its performance forecast that its subsidiary Huandong Technology continued to delve into precision reducer products and actively deployed two major categories, RV and harmonic wave. "During the reporting period, Huandong Technology's production and sales volume increased significantly to boost performance growth. In the third quarter, its main operating income increased by more than 75% compared with the same period, and its main operating income in the first three quarters increased by more than 65% compared with the same period."

Qinchuan Machine Tool (000837.SZ)'s reducer business began to increase last year due to factors such as production capacity and market, and achieved significant progress in production and sales in the first half of this year. Qinchuan Machine Tool revealed in an investor interaction that the production and sales volume of RV reducers exceeded 30,000 units in 2021, accounting for about 20%-25% of the domestic RV brand market share. It currently has an annual production capacity of 60,000-90,000 sets, and plans to produce and sell no less than 50,000 units this year. It currently has a full order book and is confident of achieving its annual plan goals.

The high-end market is expected to open up further

At present, the high-end market of reducers widely used in industrial robots is mainly occupied by foreign brands. Japanese leading companies Harmonic reducer and Nabtesco occupy more than 60% of the market share of harmonic reducer and RV reducer respectively. In recent years, with the technological breakthroughs of domestic brands, domestic brands with outstanding cost-effectiveness are also making efforts to develop high-end products.

"The competitiveness of our reducer products is mainly reflected in the price. For example, the price of Japanese products is relatively higher than that of domestic products. At the same time, our delivery time is also faster." said a staff member of the board office of Zhongda Lide (002896.SZ).

A relevant person in charge of a reducer manufacturer in central China mentioned that in the field of harmonic reducers, the performance of some manufacturers' products is now close to that of similar imported products from Japan, and their technical level is basically close to that of international counterparts, but their prices are much better than international products.

Another industry insider engaged in the sales of reducers said that through development and introduction, there has been certain progress in the technology of domestic reducers, but reducers used in new energy vehicles and industrial robots in the 3C industry often need to perform some fine movements, which require very high precision. Domestic reducers have made technological progress in recent years, and the service life of products has also increased, but "there is still a gap in precision." He also reminded that leading brands such as Kuka Robotics have mature reducer suppliers.

Shuanghuan Transmission also pointed out in an institutional survey that in the first half of the year, the company's RV reducers achieved a very critical breakthrough in the application of medium and large loads, especially 50 kg to 210 kg loads. In terms of small and medium load reducers, the company used a new generation of RV reducers with a high power-to-weight ratio to help customers replace them with local products, and the growth rate of this market is very obvious. At the same time, after the epidemic, foreign robot parts companies encountered some bottlenecks in domestic sales, and insufficient resources led to untimely supply, which also brought great opportunities to domestic robot parts companies.

Looking ahead to the future market, many industry insiders pointed out that domestic substitution in high-end markets such as harmonic reducers is still in its initial stages and is expected to open up further.

Data from a research report released by Guolian Securities on October 23 showed that the current localization rate of core robot components such as RV and harmonic reducers is 30%, among which the CR3 of Chinese-owned harmonic reducers is 38%, and the CR3 of Chinese-owned RV reducers is 26%.

"Currently, harmonic reducers used in industrial robots are still in the initial stage of domestic substitution, and 80% of the high-end market belongs to foreign brands such as Germany and Japan." The relevant person in charge of the aforementioned reducer manufacturer in Central China said that there is still broad market space for domestic substitution in the future.

At present, the domestic reducer market is still in the opening stage, and most of the market is still occupied by foreign brands. The domestic share is still relatively small, and domestic substitution is a long-term process.

Huichuan Technology (300124.SZ) also stated in an interactive exchange with investors that the company mainly purchases imported brands for the reducers it needs, and has in-depth strategic cooperation with Japan's HD in terms of harmonic reducers.