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Capitalising on the longevity economy Investment Conference 2019 - - PowerPoint PPT Presentation
Capitalising on the longevity economy Investment Conference 2019 - - PowerPoint PPT Presentation
Capitalising on the longevity economy Investment Conference 2019 Automation and Robotics Opportunities in China Raymond Ma Portfolio Manager Fidelity International Automation evolution Automation is the creation of technology and
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Automation evolution
Source: Technopedia, BCG Partners, 2018
▪ “Automation is the creation of technology and its application in order to control and monitor the production and delivery of various goods and services. It performs tasks that were previously performed by humans” ▪ Evolution towards Industry 4.0
Mechanization Steam engines Water/stream power New manufacturing Iron production Textile industry Mining and metallurgy Machine tools Steam factories
1
Technological Electrification Production line Mass production Globalization Engines/turbines Broad adoption of telegraph, gas, water supply
2
Computer/Internet Digital manufacturing PLC/Robotics IT and OT Digitization Automation Electronic/digital Networks Digital machines
3
Convergence IT/OT Autonomous machine Advanced robotics Big Data/Analytics Internet of Things Digital ubiquity/Cloud Smart factory Machine learning & AI Cyber Physical
4
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Automation evolution
Source: BCG Partners, 2018
Advanced Robotics Additive Manufacturing Augmented Reality Simulation Horizontal / Vertical Integration Industrial Internet Cloud Cybersecurity Big Data and Analytics
▪ Autonomous, cooperating industrial robots ▪ Numerous integrated sensors and standardized interfaces ▪ Augmented reality for maintenance, logistics, and all kinds of SOP ▪ Display of supporting information, e.g., through glasses ▪ 3D printing, particularly for spare parts and prototypes ▪ Decentralized 3D facilities to reduce transport distances and inventory ▪ Simulation of value networks ▪ Optimization based on real-time data from intelligent systems ▪ Cross-company data integration based on data transfer standards ▪ Precondition for a fully automated value chain (from supplier to customer, from management to shop floor) ▪ Network of machines and products ▪ Multidirectional communication between networked objects ▪ Management of huge data volumes in open systems ▪ Real-time communication for production systems ▪ Operation in networks and open systems ▪ High level of networking between intelligent machines, products, and systems ▪ Full evaluation of available data (e.g., from ERP, SCM, MES, CRM, and machine data) ▪ Real-time decision-making support and optimization
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Is China ready for more automation?
Source: EIU, 2017
China ranks 12th globally in automation readiness
Innovation environment
10th
Education policies
14th
Labour market policies
7th
China
- verall
12th
China's index score of 67.1 places it 12th out of 25 countries included in the index. It has the best score out of the upper-middle- income countries. China achieves a 'developed' score for its Labour Market Policies, where it ranks 7th= overall. This is due in part to strong policy support for students transitioning into the workplace.
Rank Country Score/100 1 South Korea
91.3
2 Germany
89.6
3 Singapore
87.3
4 Japan
82.6
5 Canada
81.8
6 Estonia
79.5
7 France
78.9
8 UK
73.1
9 US
72.0
10 Australia
70.4
11 Italy
67.5
12 China
67.1
13 UAE
64.3
Rank Country Score/100 14 Malaysia
57.7
15 Turkey
53.7
16 Russia
52.5
17 Argentina
51.7
18 India
47.2
19 Brazil
46.4
20 Colombia
44.7
21 Saudi Arabia
42.0
22 South Africa
41.0
23 Mexico
40.7
24 Vietnam
37.3
25 Indonesia
33.1
Automation readiness index
Mature Developed Emerging
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Who are the big players?
Source: FIL adapted/updated/edited from Bernstein/CLSA, 2018 Note: Reference to specific securities is for illustration only and should not be construed as a recommendation to buy or sell these securities.
Europe/US Japan Taiwan China Rockwell Schneider Emerson Mitsubishi Advantech Baosight Neusoft Digiwin Siemens GE SAP Siasun Yonyou Infosys Aspen Tech Oracle Chint Hollysys Honeywell ABB Seimens Rockwell Schneider Mitsubishi Omron Panasonic Advantech Ennoconn Adlink Hollysys Xinjie Electronic GE Honeywell Sharp Toshiba Keyence Teco Delta Etrol Seimens Schneider Fanuc Yaskawa Toshiba Delta Estun HNC Omron Okuma Mitsubishi ABB KUKA Fanuc Yaskawa Nachi Siasun Estun Omron Denso Epson Boshi Yushin Zhiyun Automation Toshiba Mistubishi Heavy DMG Mori Shenyang/Qichuan/Kunming Doosan (Kor) Machine Tool Tongtai IPG Photonics Coherent GE Fanuc Keyence Omron Han's Laser Siasun Daheng Hua Gong Tech 3D Systems GE Materialise Shining 3D Luster Honeywell Seimens Stratesys Cognex SICK Keyence Daheng Imavisi Hikvision Jintuo Siemens GE Nidec Hitachi Delta Teco Johnson Electric Shanghai Electric SMC CKD Festo Airtac Chelic Emerson Nachi Harmonic Drive Leaderdrive Nabtesco QCMT&T Siemens Elesy Yaskawa Delta Tsino Dynatron Inovance Estun THK Hiwin ATS Automation Teradyne Advantest Chroma
Equipment Component Robotics Machine Tools Actuators Reduction Gears Electric Pneumatic Hydraulic Servo Motors Others; linear guides, ball screws, testing Machine Vision Systems; 3D Printing Control System Control Device MES -> iMES/SCADA/DCS CNC PLC/PAC/IPC Laser Processing
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China is leveling up its smart factory solutions
Source: Company data, 2019 Note: Reference to specific securities is for illustration only and should not be construed as a recommendation to buy or sell these securities.
FANUC Nanjing Estun
▪ Automating industries since 1956 and listed in Japan ▪ 264 locations in 108 countries ▪ Offering solutions and products for global market: ▪ Robots - Industrial robots, accessories and software ▪ Robodrill - Compact CNC machining centres ▪ Robonano - Ultra precision machine ▪ CNC - CNCs, servo motors and lasers ▪ Roboshot - Electric CNC injection moulding machines ▪ FIELD system - Open IIoT platform ▪ Laser - Fiber laser and CO2 laser ▪ Robocut - CNC wire-cut electric discharge machines ▪ Incorporated in 1993 and listed in A- share market ▪ Multiple enterprise and engineering technology centers in Jiangsu Province ▪ Providing automation solutions and products for domestic market: ▪ Metalforning automation - CNC systems and electro-hydraulic servo system ▪ AC servo system & motion control system - Servo drives, motors and motion control products, etc ▪ Industrial robot - linear and multi axis palletizing and articulated robots, etc ▪ Smart manufacturing system - automobile, elevator and new energy industries, etc
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What drives the development of automation in China?
Source: Refinitiv Datastream, Chinese Bureau of Statistics, Statista, 2019
Shrinking population at working age
Key long term structural factors - demographic changes
20,000 40,000 60,000 80,000 100,000 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
CNY per annum
Rising average wage of workers
680 700 720 740 760 780 800 820 2017 2025E Million of persons
Source: World Bank, 2018
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What drives the development of automation in China? (cont’d)
Source: Chinese Bureau of Statistics, Statista, 2018 Note: Reference to specific securities is for illustration only and should not be construed as a recommendation to buy or sell these securities.
Factory jobs are not preferred by new generations People are attracted by more flexible delivery jobs
Key long term structural factors - demographic changes
Increasing number of university graduates
5 6 7 8 9 2009 2010 2011 2012 2013 2014 2015 2016 2017
Million of graduates
Senior high school graduates University graduates
“The young generation don’t want to work in factories”
Foxconn Chairman 10 20 30 40 50 60 4Q 15 4Q 16 4Q 17 ‘000 of riders
Daily average active delivery riders of Meituan Parcel delivery couriers in China
1 2 3 4 2016 2017 2018E Million of couriers
“Chinese Graduates Say No Thanks to Factory Jobs”
NY Times Source: Company data, CBNData, 2018
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Source: MIIT, 2018
Falling cost of buying a robotic system by manufacturer Significant subsidy/tax break support
What drives the development of automation in China? (cont’d)
Favourable structural factors - production costs and government supports
Source: BCG: ABB, Economic Justification for Industrial Robotic Systems, 2007, IFR, World Robotics, Industrial Robots, expert interviews, 2018.
55 43 33 30 28 33 40 45 40 36 81 62 46 39 33 13 11 9 8 7 20 40 60 80 100 120 140 160 180 200 2005 2010 2014 2020E 2025E Cost (USD 000s) Project Management Systems Engineering (programming, installation) Peripherals Robot (inc. software)
Industry examples:
Semiconductor
▪ tax breaks, R&D rebates, subsidised capex, ‘back stopped losses’
Display
▪ tax breaks, R&D rebates, debt waivers, subsidised capex
New energy vehicle
▪ customer subsidies, tax breaks, R&D rebates, carbon credit scheme incentive
- Non ‘high tech’ industries can also gain incentives to automate
- Localised production encouraged
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Source: IFR World Robotics, 2018.
Low number of installed industrial robots Estimated annual supply of industrial robots of 15 largest markets
Ample room for automation growth in China
Source: IFR World Robotics, 2018.
710 658 308 197 97 322 190 129 119 200 161 100 200 300 400 500 600 700 800 South Korea Singapore Japan Taiwan China Germany Italy France Switzerland USA Canada Unit per 10,000 workers Asia average: 75 Europe average: 106 America average: 91
137.9 45.6 39.7 33.2 21.4 10.9 8.3 7.7 6.3 4.9 4.5 4.2 4.0 3.4 3.4
20 40 60 80 100 120 140 160 China Japan South Korea USA Germany Taiwan Vietnam Italy Mexico France Singapore Spain Canada India Thailand ‘000 of units
Manufacturing is still very manual in China, it’s only partially explained by differences in manufacturing type.
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Source: Company Data, IFR, Gong Kong, 2017
Automation end markets are becoming gradually more diversified
1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 CNY million Machine tools Electronics manu. equp. Plastic machinery Rubber machinery Food machinery Packaging machinery Printing machinery Medical equipment Textile machinery Others
China general servo motor sales
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Automation and robotics opportunities in China
Source: Fidelity International
▪ End market outlook ▪ Structural and cyclical market outlooks ▪ Potential for increased penetration ▪ Future development of the industry ▪ Competition ▪ Barriers to entry, technology, domain specific expertise, etc ▪ Potential and risk in market share expansion ▪ Government support ▪ Direct (e.g. subsidies, tax breaks) ▪ Indirect (e.g. subsidies for customers, localisation requirements) A rough framework for the search of investment opportunities
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