The company's industry has high requirements for product technology, and the market segment of the industry is expected to maintain high growth in the next two years. The company's main business is the development, production and sales of aluminum alloy precision die castings and their assemblies for automobile starter, gearbox and chassis manufacturing. The company's business structure is roughly 50% domestic and 50% export. The main customers include Ford, BMW, Mercedes-Benz, Dongfeng Honda, Fiat, Chrysler and so on.
In the first quarter of 2014, the company's main business income was 286 million yuan (year-on-year + 28.56%), net profit was 5.26 million yuan (year-on-year-40.43%), and basic earnings per share was 0.049 yuan (year-on-year-40.41%). The operating income was 286 million yuan (+ 28.56%), the operating cost was 230 million yuan (+ 32.31%), the operating profit was 5.4 million yuan (- 49.25%), and the gross profit margin decreased. Administrative expenses 22.35 million yuan (+ 65.78%), sales expenses 19.34 million yuan (+ 14.10%), financial expenses 9.26 million yuan (+ 19.02%). The company's business is expanding steadily, the situation is good, and it is supported by government subsidies.
In the first quarter of 2014, the amount of projects under construction was 130 million yuan (an increase of 93.28% over the end of 2013), the other receivables were 69.13 million yuan (an increase of 109.23% over the end of 2013), and the amount received in advance was 2.6 million yuan (an increase of 741.92% over the end of 2013). The sales scale and structure of the company also belong to small and medium-sized automobile enterprises, the project under construction has a great impact on the financial indicators of the current period, the reserve of technical personnel and the investment in R & D costs have increased, and the export trade has a significant impact on the company. some sudden factors in production and operation lead to significant fluctuations in net profit indicators. The fullness of the company's orders and advanced technology play a decisive role in maintaining strong market competitiveness and the company's medium-and long-term development.
In the second quarter of 2014, the second phase of automotive precision die casting production expansion construction project 5500 tons / year and Taishan subsidiary about 3000 tons / year can be put into operation, thus partially alleviating the shortage of production capacity, gross profit margin is expected to increase, the decline in net profit is expected to change, and there will be an inflection point in the third quarter. The construction of the second phase of the project began in September 2011, with a design and construction period of 2.5 years, and was completed ahead of schedule on February 28, 2013. 25% of the 12,000 tons / year car generator, communications and other precision aluminum alloy die-casting projects of the company's Taishan subsidiary are expected to reach full production in the second quarter. The company will enter a period of concentrated profit release in 2014 and 2015, encouraging production and sales to increase in scale, and depreciation and financial expenses tend to be normal.
Valuation suggestion: the company's EPS in 2014 and 2015 is expected to be 0.40 yuan and 0.56 yuan, corresponding to the incentive price-to-earnings ratio of 11.44 yuan on May 6, 2014 is 28.6 times and 20.43 times respectively. Maintain a "buy" investment rating.
Risk factors: the construction progress of capacity expansion is not up to expectations.
