Shareholder replacement. The original shareholder of Shangchai shares is Shanghai Electric Group. In 2008, Electric Group transferred all its 50.32% stake in the company to Shanghai Automobile Group Co., Ltd. ("SAIC"). SAIC has become the controlling shareholder of Shangchai shares.
Business adjustment. The original product of Shangchai stock is relatively simple, mainly 8-9 liter engine, the quantity is relatively narrow, after entering the SAIC system, it has been adjusted in many aspects. Downsizing: the number of employees has dropped from more than 10, 000 in 2000 to more than 2100 in 2014. Product line expansion: the company originally covered only 8-9 liter medium-sized engines with a narrow volume. After entering SAIC, it has made various adjustments to form a full coverage of light firewood, medium firewood, medium firewood and heavy firewood. Business outsourcing: outsourcing non-critical components and making self-made key components.
The main business has declined rapidly, bringing about the expectation of transformation. The engine of Shangchai corresponds to the downstream field, including supporting vehicle, construction machinery, ship engine power station and so on. Affected by the economic downturn over the past 14 years, the construction machinery market has declined rapidly, with business income of 1.663 billion yuan in the third quarter of 15 years, down 25.20% from the same period last year, and net profit attributable to 68 million yuan, down 44.09% from the same period last year. The rapid decline in business has increased the expectation of subsequent transformation for the company.
Backed by a giant shareholder with a positive style, SAIC. SAIC is the only engine listed company under SAIC. SAIC Group is a powerful A-share giant with a 14-year operating income of 626.712 billion yuan, a net profit of 27.973 billion yuan and a market capitalization of nearly 250 billion yuan. SAIC has a positive style and has acted frequently in recent days, with a fixed increase of 15 billion for the grade market in November 15, investing in new energy vehicles, intelligent mass customization, car networking, auto finance and other related fields. With the support of large groups, it provides a strong guarantee for Shangchai shares to ensure the soundness of the main business and positive transformation.
Profit forecast and valuation. It is predicted that the EPS in 15-17 years will be 0.18,0.20,0.23 yuan. Considering the expectation of the company's transformation, it will be valued 100 times in 16 years, corresponding to the target price of 20 yuan, and the rating will be increased.
Risk hint. The development of the main business is lower than expected, and the transformation is lower than expected.