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The Far East Drive, which is about to land in Shenzhen, will be the largest non-constant speed drive shaft manufacturer in China. The company's main business is the development, production and sales of non-constant speed drive shafts and related components. At present, Far East Drive has 109 professional "U-type CNC flow production lines", with an annual production capacity of 1.4 million sets of non-uniform speed transmission shaft, can produce more than 5,680 varieties, the company's products are divided into light, medium, The four major series of heavy-duty and engineering machinery, mainly heavy-duty and engineering machinery series, mainly used for heavy trucks, loaders and cranes.
With industry-leading technology and unique process flow, it is the core competitiveness of Far East Drive. Far East Drive is a high-tech enterprise in Henan Province. It has a Henan Automobile Drive Shaft Engineering Technology Research Center and Xuchang City Driveshaft Engineering Technology Research Center. The test and inspection equipment is complete. Far East Drive has always been committed to R&D and production of non-uniform speed drive shafts. Through long-term technology accumulation, it has already possessed the leading driveshaft manufacturing technology in China and its overall level is in line with international standards. At present, the company has ten utility model patents and two design patents. Spline nylon coating technology, drive shaft face flange gear technology and welding technology have a leading position in the industry.
Far East Drive has a prominent market position in heavy trucks and construction machinery, and has established a stable supporting relationship with customers. In the field of heavy trucks, the top 10 heavy truck companies in China, with the exception of Sinotruk and FAW, are mainly supplied by companies within the group, and the company can only enter in small batches. The company has become the main supplier of Dongfeng Liuzhou Automobile under the Dongfeng Group, with 7 other heavy trucks. Enterprises are also the main customers of the company. Far East Drive's market position in the field of heavy-duty driveshafts is not comparable to other competitors. In 2007, 2008 and 2009, the market share of the company's heavy-duty series of driveshafts reached 20.16%, 22.03% and 20.10% respectively, ranking first in the industry.
In the field of construction machinery, Far East transmission products are mainly applied to shovel-based transportation machines and wheeled cranes that are mainly loaders. Major manufacturers of loaders, such as Liugong, Longgong, Xiagong, Shandong Lingong, Shandong Shangong, Chenggong, etc., and major wheeled crane manufacturers, such as Xuzhou Heavy Industries, Zoomlion, and Sany Heavy Industry, are major customers of the company. Far East Drive's market position in this field is also very prominent. In 2007, 2008 and 2009, the company's market share of the construction machinery transmission shaft reached 55.61%, 56.67% and 56.29%, respectively.
In addition to the traditional supporting model, Far East Drive has also established a solid partnership with the OEM through capital bonds. In November 2007, the company set up a joint venture with Beiqi Holding to establish Beiqi Far East. The company supplied driveshaft components or complete shafts to Beiqi Far East, and then supplied it to Beijing Automotive through Beiqi Far East. Beiqi Holding will support Beiqi Far East to obtain 80% of Beiqi Foton and Beiqi Holdings. Market share. The cooperation provided a brand-new operating model for the company to expand its market share. After this, the company signed similar cooperation agreements with Chongqing Zhongqi and Dongfeng Driveshaft, which provided strong support for the expansion of the company’s product market share.
In recent years, Far East Drive has achieved significant profitability through effective cost control measures. The main raw materials needed for Far East transmission production are steel, universal joints, blanks, and supports, which account for approximately 73% of the cost of products and are the main factors affecting costs. In recent years, raw material prices have fluctuate greatly. However, with excellent cost control capabilities, the gross margin of the heavy truck series and construction machinery products of Far East Drive has remained at around 30%, and the gross profit margin of other products has increased year by year. From 2006 to 2009, the annual production capacity of Far East Transmission Shafts reached 80, 100, 130 and 1.4 million sets respectively, excluding the shrinking downstream demand due to the financial crisis in the fourth quarter of 2008 and the first quarter of 2009, the company’s capacity utilization rate. Maintaining a high level of over 90%, the profitability is outstanding.
Far East Drive's IPO plans to issue 47 million shares and raise funds of approximately 1.25 billion yuan. The main purpose of the raised capital investment project is to expand production capacity to meet market demand and resolve production bottlenecks, including 1 million sets of annual production capacity of the headquarters and 50 annual output of Weifang Far East. 10,000 sets of commercial vehicle driveshaft projects and ZTE Forge annual production of 20,000 tons of driveshaft component forging projects, with a total investment of 348 million yuan. After the fund-raising project is completed, the production capacity of the company's commercial vehicle driveshafts will increase by approximately one time compared with the current production capacity. This will effectively solve the company's current capacity bottleneck and help the company gain greater market share. At the same time, Far East Drive will also increase the forging capacity of 20,000 tons of drive shaft blanks. Blank forging belongs to the highest technological content and the most critical link in the production of drive shafts. It also has the largest profit margins. The completion of fund-raising projects will further improve the company's rough self-sufficiency. Rate, thereby improving the company's profitability.