Incident: On July 10, the company released its 2017 semi-annual performance forecast. The net profit of 2017 H1 is expected to be 397.052 million yuan to 42.6831 million yuan, a sharp increase of 100% to 115% over the previous year.
The only target for precision mold parts in A-shares, performance continues to grow rapidly: the company's core products are precision mold parts represented by automobile mold parts, which accounted for 85.88% of revenue in 2016; the company's business also covers automation equipment parts, pharmaceutical molds and medical equipment parts series. At present, the precision mold manufacturing accuracy has reached ±0.002 mm, and the roughness has reached Ra0.2 microns. The technology is advanced. It is a first-class mold parts provider in China, and has established close ties with mold manufacturers and automakers. The announcement shows that the company's vehicle customers basically cover all mainstream car manufacturers, including FAW Volkswagen, FAW Sedan, Brilliance BMW, Beijing Mercedes-Benz, etc.; core customers also include professional mold makers such as DAYTON Group, Tianqi Mold, Schaeffler (China). In the first quarter of 2017, the company achieved revenue of 113 million yuan, an increase of 47.6% over the previous year; Guimu's net profit was 19.307 million yuan, an increase of 134.45% over the previous year. According to the interim report's performance forecast, the year-on-year growth rate for the second quarter is expected to be around 76% to 100%, showing a continuous accelerated development trend.
Demand for driving molds for new models is active, and China is undergoing rapid industrial transfer and development in developed countries: molds are an important way to process materials. More than 90% of automobile parts need to be processed and formed by molds. The market demand for automobile molds mainly depends on the development of new passenger car models. According to statistics from the China Mold Industry Association, a new model requires a cover mold worth about 100 million yuan. The revised model assumes that 25% of the cover mold is replaced on average, with a value of about 25 million yuan. Among them, mold parts account for about 10% of the value, about 10 million and 2.5 million, and the market space is broad and demand is active. Currently, mold manufacturing centers in developed countries are continuously shifting to developing countries represented by China, and China's mold parts manufacturing industry is expected to continue to grow rapidly.
Fundraising solves the bottleneck in production capacity and enriches the product line: demand in the domestic high-end mold parts market is growing rapidly, the company's capacity utilization rate is already high and becoming saturated, and there is an urgent need to increase production capacity to meet the order needs of core customers. The announcement indicates that after the completion of this fund-raising project, a production capacity of 2 million pieces of precision mold parts series products will be formed to meet the demand for mold parts in the semiconductor, computer, home appliance, automobile and other industries, and consolidate and expand the market share. At the same time, the company continues to enrich its product line, and the capital raised this time will also be invested in the expansion of automation equipment parts, pharmaceutical molds and medical equipment parts.
Investment advice: We expect the company's net profit from 2017 to 2019 to be 99.5 million yuan, 141 million yuan and 197 million yuan respectively, and EPS of 0.75 yuan, 1.06 yuan and 1.48 yuan respectively. Currently, the domestic mold industry is showing a rapid development trend with the introduction of new models and the transfer of production centers to China. The company has bound many core customers and expanded production capacity to accelerate growth. The buyer was given an -A rating for the first time, and the target price for 6 months was 33.75 yuan, which is equivalent to 45 times the dynamic price-earnings ratio in 2017.
Risk warning: risk of rising raw material prices, falling number of new models, risk of exchange rate fluctuations