Weifu Hi-Tech: National IV emissions are not just legend

The introduction of the domestic automobile exhaust emission standard process. According to the vehicle exhaust emission plan previously formulated by China, China's medium and heavy-duty and light-duty vehicles will implement the National III emission standards on January 1, 2007 and July 1, 2007. The national and national IV emissions standards will be implemented on January 1, 2010 for heavy-duty vehicles. , July 1, 2010 Light vehicles began to implement IV emission standards. However, judging from the actual implementation status, the national III emission standard of our country's medium- and heavy-duty vehicles has been implemented since July 1, 2008, and the national III emission standards of light vehicles have been implemented since July 1, 2009. Judging from the implementation effect, the switching effect between heavy trucks and buses is very obvious at present. However, the implementation of State III emission standards for light trucks is still not strict. Currently, it can only be carried out in a limited number of cities such as Beijing and Shanghai.

According to the plan, on January 1, 2010, China will implement the national IV emission standard, and it is currently less than two months from this point. The current state of development of the national IV emission standard and the preparation of the enterprise are more affected by our concern. From the investigation and understanding, the National IV emission standard has been established, but the implementation time has not been determined yet. The relevant authorities believe that the current domestic oil quality is not up to the standard to hinder the implementation of the National IV emission standards. From the perspective of the company's readiness, due to the prior implementation of State III emissions, the company's preparations for national IV emissions are insufficient. At present, only a few companies such as FAW, Second Automobile, and Weichai Power are doing experimental support.

Judging from the current situation, it is basically impossible to strictly implement the national IV emission standard on heavy-duty vehicles on January 1, 2010. It is very likely that the state will first introduce the national IV emission standard, but it is still left for the enterprise for one year. The buffer is still allowing companies to sell vehicles that meet only National III emissions during this period. By 2011, it will strictly implement the National IV emission standards. Therefore, the latest implementation time is at the end of 2011.

Discussion on the Technical Route of National IV Discharge. Since the national IV emission standard will inevitably be implemented in the next two years, what kind of production technology will be used for the national IV emissions and what the participating companies have become concerns for everyone.

To improve the environmental standards for automobile exhaust gas, the main concept is to reduce the content of particulate matter and the contents of hydrocarbons and nitrogen oxides in the exhaust gas. From a technical perspective, the existing technology approaches include SCR, EGR+DPF, and EGR+POC.

The advantages of SCR are good fuel economy, relatively low fuel injection pressure requirements, low carbon requirements for oil, and insensitivity to fuel sulfur (acceptable 500ppm), and no modification to the original III engine structure. The disadvantages are: the need for urea supply infrastructure construction, the need to prevent ammonia emissions technology, the need to reduce the engine's consumption of lubricants, and the high space requirements for the system layout (need to add urea box).

The advantages of EGR+DPF are that there is no need for a urea supply system and the system is small in size. The disadvantages are due to the high combustion burst pressure caused by the EGR system, sensitivity to fuel sulfur content (up to 50ppm), and late fuel injection of organic oil containing carbon. In most cases, the existing structure of the National III engine needs to be changed. The DPF complex is clean and recycled. And often can not guarantee the effect.

The advantage of EGR+POC is that it does not require an additional DCU (injection control unit) and is a completely passive exhaust gas treatment technology. The disadvantage is that the system requires high performance for EGR and system cooling systems.

Detailed implementation of SCR technology route. Judging from the implementation of State III emissions, the proportion of common-rail engines in heavy-duty truck engines provided by Weichai Power has exceeded 80%. Common-rail engines have become the mainstream of the industry. Due to the better combination of SCR and common rail, SCR technology is currently the mainstream of market development in the competition for the national IV emission standard technology route.

The SCR system includes: urea aqueous solution tanks, conveying devices, metering devices, injection devices, catalysts, and temperature and exhaust gas sensors. The basic working principle of the system is (see Figure 1): After the exhaust gas exits the turbine, it enters the exhaust mixing pipe, and a urea metering and spraying device is installed on the mixing pipe. The urea solution is injected and the urea is hydrolyzed and pyrolyzed at high temperature. NH3 is generated, NH3 is used to reduce NOx on the catalyst surface of the SCR system, N2 is exhausted, and excess NH3 is also reduced to N2 to prevent leakage. In general, the consumption of 100L of fuel will consume 5L of liquid urea solution.

The complex physical and chemical reactions that occur in the SCR system include: injection, atomization, evaporation of urea aqueous solution, hydrolysis of urea and gas phase chemical reaction of pyrolysis, and chemical reaction of NOX on the catalyst surface with NH3.

The chemical reactions occurring in the SCR are as follows: Urea hydrolysis: (NH2)2CO+H2O→2NH3+CO2NOX Reduction: NO+NO2+2NH3→2N2+3H2ONH3 Oxidation: 4NH3+3O2→2N2+6H2O because Bosch is very mature SCR technology, so Bosch's promotion of SCR in China will play a very important role. Bosch is expected to provide technical support to Weifu Hi-Tech through its subsidiary in China, Bosch, to produce metering devices and injection devices through Weifu Gas-Firewood, and catalytic converters and catalysts from Weifu Lida and Weifu Environmental Protection.

A preliminary discussion of the impact of SCR products on Weifu's earnings. From the current point of view, there are two options for the sale of SCR systems. One is to install DCU (injection electronic control unit) chips from Weifu Steam Turbine and sell them directly to a host plant like Weichai Power; 1 is sold to Bosch Automobile Diesel, supporting the current German Bosch third-generation common-rail engine control system DeNOXTRONIC-2.2, the system uses EDC17 control chip, can control the engine's fuel injection and tail gas treatment of liquid urea injection. We believe that the use of the EDC17 control chip will save one DCU. Therefore, Weifu Automobile Diesel sells semi-finished SCRs to Bosch Diesel, and common-rail engines are jointly sold, which is a favorable choice for both parties.

At present, Weifu Diesel has not yet introduced Bosch's SCR production line. The supply of SCR products in China is now provided by Bosch's plants in Austria. Weifu Diesel is expected to start the introduction of production lines in the second half of 2010, which will be completed in the second half of 2011. Localization of such products.

The selling price of SCR products is currently inconclusive. From the experience of selling prices of common rail products, the localized product price is about 20%-25% of the price of the original imported sample. Therefore, we estimate the selling price of SCR products supporting heavy trucks. Not more than 10,000 yuan, the SCR products for the light trucks will not exceed 4,000 yuan.

Assuming that all SCRs are ultimately sold by Bosch Diesel Engine, the SCR prices for the supporting heavy trucks and light trucks are 7,000 yuan and 3,500 yuan respectively, and the gross margin and net profit margin of SCR's entire industrial chain are 50% and 25% respectively. In the profit distribution, it is assumed that Bosch Diesel Engine accounts for 70%, and the remaining 30% is shared by Weifu Diesel and Weifu Lida and Weifu Environmental Protection.

Assuming that the national IV emission standard was announced on July 1, 2010, and strictly implemented from July 1, 2011, it is estimated that Bosch Diesel Engine sold 1400 thousand sets and 370,000 sets of SCR in 2011 and 2012, respectively, and SCR products were It contributed a net profit of RMB 100 million and RMB 257 million to Weifu Hi-tech, which amounted to RMB 0.18 and RMB 0.45 per share.

There is also an important factor that has a significant impact on the profitability of SCR products. This factor is the depreciation of SCR product line investment. Before the investment in the common rail system of Bosch Diesel Engine Co., Ltd. exceeded RMB 5 billion before and after, over RMB 1 billion was invested in the construction of the technology center, and the investment in real production equipment was estimated to be about RMB 1 billion. We expect that the equipment investment for SCR production line will only need 2-3 billion yuan, because the product calibration and process parameters will be supported by the Bosch Automotive Diesel Technology Center, which will greatly reduce the investment in the SCR complete system, so when the national IV standard is implemented, , The profitability and profitability of the SCR system have exceeded expectations.

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