Domestic steering gear industry vanguard. The company focuses on the production of automobile steering gear, with the fourth revenue in 2010 and the eighth in terms of sales scale. The main advantage lies in its steady development idea: the successful transformation from mechanical steering gear products to hydraulic power steering gear, comprehensive product renewal and rapid growth of income. At present, hydraulic power steering gear is its pillar product, which is in the stage of steadily expanding markets at home and abroad. Electronically controlled steering gear has achieved mass production in the first half of this year, following the domestic steering gear electronic control wave, the follow-up speed is expected to continue to be fast.
Hydraulic power steering gear is developing rapidly. In recent years, the company has successfully realized the product replacement from mechanical steering gear to hydraulic power steering gear. The production and marketing scale of circulating ball and gear rack products has increased rapidly, and with the gradual expansion of the scale, the gross profit margin of gear and rack products has increased year by year. The profit level of circulating ball steering gear has remained stable, and the gross profit margin has remained at a high level in the past two years. Gross profit margin is expected to remain stable or continue to grow slightly with the increase in the proportion of gear and rack sales.
Electronically controlled steering gear will become the star product of the company. The electronically controlled steering gear which has been in reserve for nearly 4 years has entered the harvest period, and the domestic steering gear electronic control wave has just begun. The company has chosen the stage of mature technical reserve and mass production in the industry, which can effectively avoid the risks in the initial stage of putting new products on the market, and successfully undertake the rapid growth market brought by product switching. After years of technical reserves, results have been achieved.
Fund-raising projects help to increase profit space and market share. This time, we plan to issue 65 million shares to raise funds for expanding the production of hydraulic power steering gear for passenger vehicles and commercial vehicles and replenishing the production capacity of precision castings. The new annual net profit is 70.35 million yuan, which is committed to increasing the market share and expanding the size of the company.
As of June 30, 2012, the number of H shares outstanding was 86.71 million shares, accounting for 33.01% of the total share capital. As of September 26, 2012, the average closing price of Zhejiang Shibao H shares on that day, the first 5 days, the first 10 days and the first 20 days was 2.22, 2.22, 2.21 and 2.2 Hong Kong dollars per share respectively, which is equivalent to 1.8, 1.8, 1.8 and 1.79 yuan per share respectively, calculated according to the exchange rate of Hong Kong dollar against RMB on that day.
The valuation range is 5.5-6.2 yuan per share. It is estimated that the company's fully diluted earnings per share from 2012 to 2014 are 0.32 yuan, 0.39 yuan and 0.46 yuan respectively. Considering the relative valuation and DCF valuation, the value of the company is 5.5-6.2yuan, and the EPS valuation of the corresponding company in 2011 is 15.9-17.9 times. The main risk is that the continued economic downturn leads to a slowdown in the growth rate of the auto industry.
