Recently, the company announced that it had signed a cooperation agreement to transfer its 80.1% stake in Tianjin Boxun Automobile Co., Ltd. (hereinafter referred to as "Tianjin Boxun").
Our analysis and judgment
(1) marching into the whole vehicle ODM and actively exploring the extension of the industrial chain. Tianjin Boxun is mainly engaged in the manufacturing and sales of automobiles and spare parts, automotive equipment, engines, electric drive systems, battery package systems, energy storage systems, electronic products, internal combustion engine parts, etc. Tianjin FAW Xiali is funded by assets and liabilities such as vehicle-related land, plant and equipment, and Nanjing Boxun New Energy is jointly funded by cash, of which FAW Xiali holds 19.9% and Nanjing Boxun holds 80.1%.
After the completion of the equity transfer, the capacity injection of Tianjin FAW Xiali is expected to lay a solid foundation for Alt parts production and subsequent vehicle manufacturing business layout, helping the company to continue to explore the breadth and depth of the industrial chain.
(2) in the short term, the Tianjin factory is expected to provide important production capacity for assembly contract manufacturing and parts production, and to feed the company's design and research. As providing design solutions for the whole vehicle factory is the company's existing main business, if a car manufacturing brand is set up for self-research and production, it may compete with important customers, therefore, we believe that Tianjin factory will mainly provide important production capacity for assembly OEM business and parts production. In addition, on March 15, the company signed a technology license contract with Honda, which allows the company to develop, manufacture and sell related models based on the relevant technologies licensed by Honda, while Honda charges a commission fee according to the net income of the models sold. The innovation of this model helps to enrich the company's revenue sources, realize manufacturing back-feeding research and development, and further deepen the strategic cooperation between the company and important customers. It is expected that the Tianjin plant will also provide a certain capacity guarantee for this model.
(3) in the long run, the company's layout, vehicle design, core components R & D and production, ODM OEM assembly, business diversification to the international leader. Third parties with complete vehicle design and specialized parts R & D and production have an inherent advantage in providing assembly contract manufacturing for vehicle factories. MGA.N International, for example, has maintained vehicle assembly business revenue of more than $5 billion since 2018, accounting for more than 15 per cent of revenue and showing a steady increase. Art ploughs the whole process of automobile research and development, and has successfully developed nearly 300 models for more than 60 customers, and its comprehensive research and development capability is in the leading level in China. and the engine, new energy powertrain, reducer and other parts incubated by the company for many years have entered the stage of mass production and climbing. Magna, the expansion of ODM OEM will help the company to improve its manufacturing capacity in all aspects, create an one-stop R & D delivery brand strength, enrich revenue sources, and supplement diversified development momentum.
Investment suggestion: the company's net return profit from 2021 to 2023 is estimated to be RMB 3.04max, corresponding to EPS 0.62, RMB1.00max, and PE38X/23X/18X, which is given a "recommended" rating.
Risk tips: 1, the risk that the equity transfer process is not as good as expected; 2, the risk that the release effect of production capacity is not as good as expected.