cut a striking figure
Founded in 2002, Xinbang Holdings has gradually developed into a second-class supplier of automotive plastic plating industry around the world. its main products include inner door handles, door trim panels, console components, dashboards and so on. In terms of revenue, the company is the second largest automotive plastic plating manufacturer in China, with a market share of 5% in 2016.
Steady operation. Xinbang achieved a total income of 1.5 billion yuan in 2016 and achieved steady income growth in the past three years, with a compound growth rate of 23.7%. 1H17, the company's domestic revenue accounted for 43.4%, overseas accounted for 56.6%. Due to the increase in the contribution of overseas market revenue and the higher unit price of products, the average unit price of 1H17 products rose to 4.9 yuan, an increase of 9.8% over the same period last year. The company's top 10 supply brands account for about 85% of revenue, mainly focused on American and German brands. The company looks forward to further strengthening the business of Mercedes-Benz and Audi in the future, while striving to enter the Japanese brand supply chain.
Capacity expansion. As of June 17, the company has 10 electroplating production lines in Huizhou, Wuxi and Tianjin, with a total production capacity of 2.5 million square meters. The company currently has an order output value of RMB 8.7 billion and will focus on delivery in the next 5 years.
As plastic electroplating is a highly polluting industry, the government has gradually strengthened environmental supervision and strict control of waste water emissions. Electroplating enterprises need to obtain pollutant discharge permits issued by the government. As it is extremely difficult to apply for an emission permit and there is a daily emission limit, the company plans to expand its production capacity through the acquisition of electroplating production lines or the construction of overseas factories to meet the demand for order delivery. The company expects the electroplating capacity to increase to 2.9 million square meters in 18 years, and the capacity utilization rate will remain at 70%, 80%.
Excellent profitability. The company vertically integrates parts design, mold manufacturing, injection molding, electroplating, assembly and other production links to create an one-stop production platform to improve the precision, flexibility and efficiency of the production process. The yield of electroplated parts of 1H17 company is 89.6%, which is ahead of the industry average of 80% and 90%. Due to the excellent yield and increased capacity utilization, the company's 1H17 achieved a gross profit margin of 42.0%, and its profitability was better than the industry average. Although the prices of major electroplating raw materials (PC, nickel sulfate) have risen by about 40% since the fourth quarter of 16, the company is confident that the 17-year gross profit margin will remain above 40%, mainly because improved capacity utilization can offset the negative impact of higher raw material costs.
Valuation. The market unanimously expects Xinbang to make a net profit of 380 million yuan in 17 years, an increase of 27.9% over the same period last year and 475 million yuan in 18 years, an increase of 24.6% over the same period last year. The company's current share price corresponds to 10.7 x 17-year PE,8.6x and 18-year PE, which is a 32% discount compared to the industry average. Management directs a 17-year dividend yield of 30%.