The demand in the international market is steady, and the domestic market is growing fast.
The company's products are basically used in the AM market. 2013H1 company income from foreign AM market accounted for 96.6%, domestic sales accounted for 3.4%, and the main domestic sales were eventually converted to export AM. At present, there are about 720 million passenger cars in overseas markets, and the annual demand for AM aluminum alloy wheels is about 15 billion yuan.
Domestic laws and regulations are strict on the management of automobile wheel change, and the corresponding market is relatively small, but there is still an annual demand for aluminum alloy wheels in the AM market of about 1.5 billion yuan, and with the increase in the number of domestic passenger cars, this market continues to grow.
Good customer structure and guaranteed revenue growth
The company currently accounts for more than 40% of sales from Russia, South Africa, India and other countries, while sales from the European Union account for about 9%. The company's main export destination is the developing countries with rapid economic growth, and its domestic car sales and ownership are in a period of rapid growth, which provides a large space for the growth of the company's product sales.
The advantage of scale is obvious, and the elastic production adapts to the production of aluminum alloy wheels in AM market has obvious scale effect. At present, China is the largest producer of aluminum alloy wheels in the world, and its production capacity ranks fifth in China, while the production and sales volume of AM market ranks first in China.
The company has flexible design and production capacity, which effectively unifies the advantages of scale and customized production. The company launches about 30 new products every month, and can accept orders of tens of thousands to hundreds of thousands of levels at any time.
Good financial position and strong profitability
After excluding the loss-making wheel projects, the company's profitability increased steadily, with gross margins of 19%, 21% and 25% respectively in 2010-12. 2013H1's gross profit margin rose to 26%, 3-4 percentage points higher than the industry average. During the period 2010-12, the expense rate was 10%, 9% and 10%, which remained basically stable.
Fund-raising projects to expand production capacity
The company's capacity utilization rate has been more than 90% since 2010. Fundraising project 2.3 million foundry wheels project capacity was put into operation in 2014, with 13% and 35% production capacity growth in 13 and 14 years, which meets the company's future sales needs.
Profit forecast and investment suggestion
We predict that the diluted EPS of the company's annual issue on 2013-14-15 will be 0.96, 1.20 and 1.48 yuan respectively, corresponding to 13-14 times PE in 2013, and the reasonable range of offering price will be 12.5-13.4 yuan.
Main risk
1. Russia and other major customer countries anti-dumping. At present, about 30% of the company's sales revenue comes from Russia, and if Russia implements anti-dumping measures, it will have a greater impact on the company's profits.
2. RMB appreciation. The appreciation of RMB will affect the performance-price ratio of the company's products overseas.