A comprehensive large group spanning the fields of import and export trade and industrial textiles. The company is a comprehensive large-scale enterprise involving import and export trade, automotive interior business and new textile materials. In 2015, the three businesses accounted for 82%, 15%, and 3% of revenue, respectively. The import and export trade business mainly obtains export trade spreads and agency commissions by providing trade services to brands in the fields of textiles, clothing, and household textiles. It achieved revenue of 6.299 billion yuan in 2015 and is currently actively transforming into an integrated supplier. The automotive interior business mainly provides automobile manufacturers with roof interiors, seat fabrics, car seat pads, sound insulation pads, etc. and achieved revenue of 1,154 billion yuan in 2015; new textile materials mainly focus on new materials used in ports, vehicle manufacturing, sewage treatment, environmental protection, etc., and achieved revenue in 2015 193 million yuan.
Seize the opportunity of increasing automobile sales and vigorously expand the automotive interior business. In recent years, the company has seized the development opportunity of a rapid increase in domestic automobile sales and achieved rapid growth in the scale of the automotive interior business. CAGR reached 20% in 2011-2015. At present, the company's automotive interior business has formed stable supply relationships with SAIC Motor, FAW, etc., making it the largest carpet supplier in the country. In the future, the company will actively expand into the field of automotive interior parts with higher added value based on this.
The fixed increase plan strengthened production and layout, and the majority of controlling shareholders subscribed, showing confidence. The company's fixed growth plan plans to raise no more than 1,248.6 billion yuan at a price of 10.63 yuan/share for carbon fiber and its pre-impregnation production projects, automotive decoration business production bases in Shenyang and Ningbo, capital increase for CR companies, and acquisition of 100% of PFI's shares by CR Company. Among them, Shenda Group, the majority shareholder, plans to subscribe for 31.07% and lock it in for three years. In the field of automotive interior parts, the company's fixed growth plan focuses on industrial support for key customers on the one hand, and actively expands its product range from soft decoration to plastic hardware with higher added value on the other. In terms of industrial goods, carbon fiber and pre-impregnation production projects will further enrich the product line. It is expected that after the fundraising project is implemented, it will effectively enhance the company's performance, as well as the company's profitability and competitiveness. Currently, the plan has been approved by the Shanghai State-owned Assets Administration Commission.
In the context of further progress in the reform of state-owned enterprises, the company is expected to take the lead in the reform. Shenda Group, the controlling shareholder of the company, holds 31.07% of the company's shares. The actual controller of the company is the Shanghai State-owned Assets Administration Commission. In the 2016 quarterly report, Shenda Group clearly stated that in response to the call for state-owned enterprise reform, the company is studying the listing of the textile group's overall or core business to achieve listing of its textile products and foreign trade related businesses; and plans to gradually inject some of the unlisted foreign trade business assets controlled or indirectly controlled by listed companies within five years that meet the requirements.
The company is expected to achieve net profit attributable to the parent company in 2016-2018 to be 228, 252 and 269 million yuan respectively, up 34.07%, 10.73% and 6.53% year-on-year, corresponding to EPS of 0.32, 0.36 and 0.38 yuan/share, respectively. The relevant comparable company's PE in 2016 was between 27X-50x. Considering the high growth potential of the company's automotive interior business, the company was given 40XPE in 2016, corresponding to the target price of 12.8 yuan, which increased its holdings.
Risk warning: State-owned enterprise reform fell short of expectations, and downstream demand worsened.
