Company overview
The company is China's leading supplier of automotive plastic plating parts. It has expanded into a global supplier since 2002, with offices in North America, Europe and Asia, serving a number of leading international first-tier suppliers and vehicle manufacturers. The company's main products are car interior plating parts for passenger vehicles, such as interior handles, door trim panels, transmission lever covers, steering wheel parts, console parts and dashboards, which are generally used in world-renowned luxury car brands. In terms of 2016 earnings, the company is the second largest supplier in China and the largest exporter of automotive plastic plating parts.
FY2014-FY2016, the company's performance maintained steady growth, with total revenue of 1.006 billion yuan, 1.204 billion and 1.541 billion respectively, net profit of 181 million, 222 million and 298 million respectively, and three-year compound growth rates of 23.7% and 28.3%, respectively. Profit margins rose slightly steadily: gross profit margin rose to 41.1% from 38.5% in 2014, and net profit margin increased from 18.0% to 19.4%. The increase in performance comes from the rise in volume and price of automotive products over the past few years, mainly due to the continued strong demand in China and the company's active expansion in North America and Europe.
Industry status and prospects
Global car sales are growing, driven by the economic recovery in Europe and the United States and increased demand in the Asia-Pacific region, from 78.2 million in 2011 to 94 million in 2016, and is expected to reach 103.8 million in 2019. China has become the world's largest carmaker, producing 28.1 million vehicles in 2016, accounting for 29.7% of the global total.
Surging demand in emerging markets, growth in demand for advanced features to stimulate technology development, and stricter regulatory frameworks have pushed the auto parts industry to upgrade. The global market size has increased to 1.51 trillion from $1.33 trillion in 2011, and is expected to grow moderately by CAGR2.7% over the next three years.
Advantages and opportunities
Track record as a global supplier of internationally renowned luxury brands
Vertically integrated business model, key production steps with industrial automation capability
Expertise in production and electroplating technology produces top output weaknesses and risks in the industry.
Companies will be affected by potential changes in US trade policies and laws.
Social, political and government policy changes and new laws and regulations in Mexico may have a significant adverse impact on the company's expansion plans and operating results.
The company's products are subject to continuous pricing pressure, customer cost-cutting measures and customers' ability to find other suppliers or cancel orders.
Valuation
The prospectus does not give an earnings forecast, and the IPO is priced at a price-to-earnings ratio of 9.2-10.1 times 2016A, with a low valuation (comparable industry: 18.9 times for Minshi Group, 13.2 times for Nestor). The company has performed well in the past 2 years and has been able to improve its profit margin. The amount raised by IPO this time will be used to expand the production base in China and Mexico, as well as increase the company's direct participation in mid-and high-end car manufacturing and market share in Europe and the United States, which will help boost performance and continue the growth momentum. It is expected that the valuation will have room to improve after the listing, and we give IPO a dedicated rating of "7".