Company profile: domestic middle and high-end passenger car interior and exterior decoration industry leader.
Beijing Weikawei Auto parts Co., Ltd. (hereinafter referred to as Jingwei Co., Ltd.), established in 2002, is a Sino-German joint venture manufacturer and service provider of passenger car internal and external accessories system. the main shareholders are Central Investment and Ebersler, a famous German auto parts company. The former is actually controlled by Li Liyu and Zhang Zhijin, while the latter is actually controlled by the German Mayer family, each of which holds 30% and 25.2% of the company. The company was listed on the small and medium-sized board IPO of the Shenzhen Stock Exchange in February 2012, raising a net capital of 1.4 billion yuan. At present, the company's main business has expanded to four major departments: interior and exterior decoration, automotive electronics, intelligent equipment and new energy vehicles.
High growth of internal and external decoration business and strong profitability.
In the internal and external decoration business, on the basis of the introduction of advanced German technology, the company has gradually improved and improved the process technology through digestion, absorption and re-innovation, and has the capacity of synchronous development, overall supporting scheme design and modular supply. Thus established the company's leading position in the interior and exterior decoration industry of medium-and high-grade passenger cars, especially in the aluminum alloy exterior decoration of luxury cars. The main customers are concentrated in FAW-Volkswagen, brilliance BMW, Shanghai Volkswagen, Beijing Mercedes-Benz, Shanghai General Motors, FAW Toyota, Changan Ford and other well-known vehicle manufacturers. The customer relationship is stable and quality, and the supporting experience is rich. The top five customers account for more than 70% of the company's operating income.
Benefiting from the rapid growth of China's automobile industry, especially the medium-and high-grade passenger car industry in the past, the company's internal and external decoration business has grown rapidly, with a compound growth rate of 30.4% and 20.3% respectively for total income and net profit from 2008 to 2015. Except for the decline in net profit in 2013 due to the closure of the door frame business of Beijing Central parts Company and a sharp rise in labor costs, the performance has maintained positive growth for the rest of the year. The company has strong profitability, with a gross profit margin of more than 30% and a net profit rate of more than 10%, keeping a leading position in the industry, about twice the industry average. With the continuation of the upgrading trend of automobile consumption in China, the sales of mid-and high-end and luxury cars will maintain steady growth, and we expect the company's internal and external decoration business to maintain a healthy growth of about 10% in the future.
Mergers and acquisitions to expand automotive electronics, new energy vehicle business, open up growth space.
As the upstream of the whole automobile industry, the competitive pressure of the auto parts industry has increased day by day with the slowdown of the overall domestic automobile sales in the past two years. Integrating resources of all parties, expanding the industrial chain, increasing business scale and product added value have become the main trend of auto parts enterprises, and Jingwei shares is also one of them. After its listing in 2012, the company acquired several auto parts companies by expanding its production capacity, thus enriching product types, optimizing product structure, and strengthening business coordination with the entire car factory.
It is worth mentioning that in terms of emerging businesses, the company is also accelerating its strategic layout. In 2014, the company acquired a 100% stake in Ningbo Fuda, a domestic automotive electronics company, for a total of 1.13 billion through a "stock offering plus cash" approach, and Fulda's Gong Fogan and his son held a 15.5% stake in Jingwei shares. Fulda's intelligent electronic integrated control industry belongs to the sunrise industry and is growing rapidly. we expect that under the trend of increasing automobile electronic penetration, we are expected to achieve more comprehensive import substitution in the future.
In November 2015, the company invested 200 million yuan to subscribe for 20% of Changchun New Energy vehicle. In December, the company bought 48% of Shenzhen Wuzhoulong Motor, a manufacturer of new energy commercial vehicles, with cash of 550 million. Coupled with the company's major shareholder Central's investment in November 2015, the acquisition of 75% stake in Germany Stuttgart Electric vehicle Co., Ltd., the company's new energy vehicle business will form a three-place synergy and complementary advantages in the future.
Investment advice & valuation.
We believe that although the new energy vehicle business will be a drag on the company's performance in the short term, with the gradual landing of the transformation and upgrading strategy, the company has a very broad space for long-term development. We expect the company's earnings per share for 2016 / 2017 to be 0.83 yuan 1.09 yuan respectively, with a target price of 19.3 yuan corresponding to 18 times the expected price-to-earnings ratio of 23 currencies for 2016 / 2017, covering the buy rating for the first time. (the current price is as of February 6).