Main points of investment:
For the first time to cover, give careful to increase the rating. The company is the national brand leader of turbochargers and has a leading position in diesel turbochargers. It is cautiously optimistic that the company will achieve a breakthrough in gasoline turbocharged products in 2014 and is expected to contribute profits from 2015. For the first time, the coverage gives a cautious overweight rating, with reference to the valuation level of comparable military stocks, giving a target price of 5.1 yuan, corresponding to 85 times 2014 earnings. It is predicted that the EPS in 2014-16 is 0.06,0.07,0.09 yuan respectively.
Diesel turbocharged products grew moderately. The company's diesel turbocharger products are in a leading position in China, with sales of 650000 sets in 2013. It is predicted that the company will be able to maintain its existing market share by virtue of its competitive advantages in cost, channel and new products, and achieve a moderate increase in sales with the growth of diesel engines, but under the fierce challenge from domestic and foreign competitors, the gross profit margin of the product has declined steadily.
Be cautiously optimistic that the company will achieve a breakthrough in gasoline engine turbocharged products. With the increasingly stringent national emission regulations and the development trend of global low-carbon economy, engine turbocharging technology has become the preferred emission reduction technology for high-end commercial vehicles and passenger vehicles. According to the annual report, by the end of 2013, the company's independently developed gasoline engine turbocharged products have simultaneously developed nearly 20 projects for Changan Automobile, Great Wall Motor and other 15 main engine factories, and are optimistic about achieving mass production and supply in 2014 and contributing profits from 2015.
Risk hint: gasoline engine turbocharged products mass production test is not up to standard, technology research and development risk.
