Huahong Technology(002645)2022-12-04 10:28Group 1: Industry Overview - The domestic scrapped automobile market has a huge stock, but the effective recovery rate is very low, primarily due to traditional scrapping regulations that hinder recovery, leading many scrapped vehicles to flow into the second-hand market or black market, which poses significant risks to environmental protection and traffic safety [2][3] - If the automobile recovery rate reaches 3% in the next three years, the estimated market for waste materials could reach CNY 120 billion, while the remanufacturing market for the five major assemblies could reach CNY 79.9 billion, totaling CNY 199.9 billion, indicating a vast market space [2][3] Group 2: Regulatory Changes - The new "Regulations on the Recovery and Disposal of Scrapped Motor Vehicles" came into effect on June 1, 2019, and the draft implementation rules have been released, with mandatory national standards for scrapping enterprises approved and implemented since December 17, 2019 [2][3] - The new regulations eliminate total control, allowing for the expansion of recovery enterprises and removing the previous city-specific licensing restrictions, which encourages market-driven pricing for scrapped vehicles [3] Group 3: Company Strategy - The company is a leading domestic waste steel processing equipment manufacturer, with key products including waste steel crushing lines, shears, and balers, which are essential for automobile dismantling [3] - The company has actively laid out its operations in the automobile dismantling and recycling sector, establishing Donghai Huahong in 2013 for waste steel processing and trade, acquiring Beijing Zhongwu Bo in 2018 to enter the automobile recycling and dismantling field, and further expanding its waste steel processing trade scale by acquiring Qian'an Juliy in 2019 [3] - Future plans include strengthening industrial synergy among various business segments to create a comprehensive automobile recycling and dismantling industry platform [3]