I. Overview of events
Recently, we have conducted a survey on Dongan Power Company. Communicate with the company secretary about the company's current business situation, product planning, customer needs, etc.
II. Analysis and judgment
Changan Auchan and BAIC Weiwang drive their engine business into a strong growth cycle.
Dongan Power headquarters has M and F series engines, of which F series engines are gradually withdrawn, and all production capacity is transferred to M series, with a planned production capacity of 350000 vehicles.
Changan Auchan and BAIC Weiwang's rapid growth drive the company's performance. Now the average monthly sales are 20-30,000 units, and the production capacity is basically saturated. Auchan launched a new model at the end of 2015, and we expect to maintain high sales in the next two years. Dongan Power has entered a strong cycle of performance growth.
Dongan Mitsubishi is the core supplier of Changan, and the contribution of investment income is growing steadily.
Changan Mitsubishi now has two main series in production, 4G1 and D series, of which D series engines are contract manufacturers for Changan. 4G1 mainly matches CS35 and CX70, and has a capacity of 150,000. D series engines, mainly match CS75 models, match CS95 in the future.
The planned production capacity is 450000 units, and the current production capacity is basically saturated. Dongan Mitsubishi sold a total of 320000 units from January to September and is expected to sell more than 420000 units for the whole year. CX70 is a major growth point, cutting into the 70-100000 small and medium-sized SUV market, which is expected to contribute 70,000 sales this year. CS35, CS75, Ono market position is stable, steady growth, contributing a total of 350,000 sales.
This part has a reserve of 1.2T engine, Dongan Mitsubishi has developed a 6AT gearbox, and the future income is expected.
The department now has a reserve of 1.2T engines, which can be expanded to 1.0T and 1.5T. It has been tested on the Baoding Chang'an model and is expected to be available in 2018.
Dongan Mitsubishi has developed 6AT products on the basis of 4AT and is currently testing it on the road in Changan CS75.
Third, profit forecast and investment suggestions
Driven by Changan vehicle business, the company's performance has entered a strong growth cycle, the performance of this part has reversed, and the investment income has increased steadily. Regardless of the future income of 6AT gearbox, we estimate that the EPS from 2016 to 2018 will be 0.33,0.49,0.61, respectively, and the corresponding PE will be 36,24,19 times. For the first time, coverage gives a "highly recommended" rating.
IV. Risk hints
The growth rate of the industry is not as fast as expected; the market development of 6AT and 1.2T new products is not as expected.