Main points of investment:
The company's main business is to develop, produce and sell aluminum alloy precision die castings and their assemblies for automobile engine, gearbox and chassis manufacturing. The industry has high technical requirements for products, and the market segment of the industry is expected to maintain high growth in the next two years. 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 2013, the company achieved 1.058 billion yuan in main business income, an increase of 39.71 percent over the same period last year, and a net profit of 26.32 million yuan, down 38.36 percent from the same period last year. Realize earnings per share of 0.25 yuan. The company is full of orders, the market is expanding rapidly, but the production capacity is insufficient. In 2013, depreciation, financial expenses increased rapidly, and some logistics costs rose, which eroded some profits and led to the growth of income and net profit.
The company will enter a period of concentrated profit release in 2014 and 2015, and the new production capacity will fully reach production in the first quarter, promoting the scale of production and sales volume, depreciation and financial expenses tend to be normal, and the gross profit margin and net profit margin reflecting profitability will be greatly improved, resulting in a substantial increase in net profit compared with the same period last year. The company has full orders, advanced technology, strong market competitiveness and good prospects for medium-and long-term development. The company is expected to increase its net profit by 60% and 40% in 2014 and 2015.
Valuation suggestion: the company's EP S in 2014 and 2015 is expected to be 0.40,0.56 yuan, corresponding to the closing price of 12.09yuan on March 4, 2014. the dynamic price-to-earnings ratio is 30.23,21.59 times, respectively.
Risk factors: major customer purchase orders have decreased significantly, and there are major product quality defects.
