Main points of investment
FAW Xiali's 2012 net profit was 34.2 million yuan (year-on-year), with an EPS of 0.02 yuan, in line with market expectations. Affected by the slowdown in industry growth and the aging of products, the company's sales and profitability have declined significantly. In 2012, the company sold 185000 vehicles (year-on-year-24.7%), achieved operating income of 7.5 billion yuan (year-on-year-24.6%), and net profit of 34.2 million yuan (- 69%). Among them, FAW Toyota contributed investment income of 1.29 billion yuan (+ 5% compared with the same period last year), exceeding market expectations; the loss in this part increased, and the estimated net loss exceeded 1.2 billion yuan. The sales and profit of 1Q2013 company did not improve obviously, with a net loss of 58.14 million yuan and an EPS- of 0.04 yuan.
FAW Toyota maintains a low market position and stable profitability. In 2012, FAW Toyota sold 495000 vehicles (- 6.3% compared with the same period last year), achieved a net profit of 4.63 billion yuan (+ 5.3% year-on-year), contributed 1.29 billion yuan in investment income (+ 5.2% year-on-year), and made an average selling price of 122000 yuan (down 12000 yuan from the same period last year). Bicycle profit is 9400 yuan (+ 6% year-on-year). 1Q2013 FAW Toyota sold 114000 vehicles (- 18% year-on-year) and is expected to contribute 220 million yuan (- 44% year-on-year) to investment income. As the impact of the Diaoyu Islands incident fades, FAW Toyota is expected to maintain a relatively low market position and stable profitability.
Our business continues to lose money, and short-term improvement is limited. Affected by the aging of the model, the company sold only 185000 vehicles in 2012 (- 24.7% compared with the same period last year), the market share further declined, the loss per bike was close to 6806 yuan, and the loss was further increased. 1Q2013 sales of 42000 vehicles (year-on-year-27%), bicycle loss of 6530 yuan, there is no obvious sign of improvement in the short term. In 2013, the company plans to invest 850 million yuan in R & D projects, the new product N7 is in the market development period, the company is expected to lose about 1 billion yuan in 2013.
The overall listing of FAW Group is still the general trend, which will help to improve the medium-and long-term valuation level. FAW Group has been listed in the list of 30 overall listed central enterprises delineated by SASAC of the State Council as early as 2007, and it is also the only one of the three major automobile groups in China that has not been listed as a whole. Although the timing issues of general concern in the market are difficult to predict, overall listing expectations still help to improve the company's medium-and long-term valuation.
Risk hints: the slowdown in macroeconomic growth leads to a downturn in car demand; FAW-Toyota sales and profits are lower than expected; operating losses are higher than expected; raw material prices and labor costs have risen sharply.
Profit forecast and valuation: considering the recovery of FAW-Toyota sales, the company slightly raised the company's 14-year profit forecast for 2013 (the original 13 / 14 EPS was 0.05 EPS 0.07 yuan), and added 15-year profit forecast of 0.10 yuan. The current price is 4. 12 yuan, which corresponds to 1. 7 PB and 1. 7 times as much as 1.7 plum in 2013 and 15 respectively. Combined with the average valuation level of the industry, we believe that the reasonable valuation of the company is 2.1x PB in 2013, maintaining the company's "overweight" rating, with a target price of 5.00 yuan.