Event: Zhongtai Motor and its wholly-owned second-class subsidiary Zhejiang Zhongtai Motor signed a "joint venture contract" with Ford Asia Pacific and Ford Motor (China) in Beijing. The parties intend to jointly establish a Sino-foreign joint venture limited liability company in Zhejiang Province, China.
The joint venture company defines the pure electricity platform, which is exclusive in China. According to the announcement, the joint venture platform is located in pure electricity, and neither the parties to the joint venture nor their controlled affiliated companies shall in any way carry out or participate in the same competitive business as the R & D, production, sales and service of pure electric passenger vehicles engaged in by the joint venture company. This means that the joint venture platform will be the only platform for Ford's pure electrification strategy in China in the future, Zhongtai directly binds Ford, from 0 to 1, there will be diversified cooperation in the future.
To adapt to the Chinese market, Ford's new energy strategy in China may be based on pure electricity in the future. According to marklines, Ford has sold new energy models: Focus EV (2001), C-Max PHEV (2012) and Fusion PHEV (2013). From January to September 2017, the two ranked in the top 10 with cumulative sales of 7285 and 6612, respectively, while Focus ranked 19th with cumulative sales of 1468, according to EV SALES. Ford plans to launch 13 electric vehicles in the next five years, including 6 plug-ins, 6 hybrids and 2 pure electrics. it can be seen that Ford is mainly based on hybrid technology in the global new energy strategy. however, we believe that in the process of de-"one Ford", Ford will certainly adapt to the actual demand of pure electricity in the Chinese market, which will be dominated by pure electricity in China and rely more on Zhongtai Ford joint ventures.
Ford is expected to provide technical, management and purchasing support to the joint venture in the future. The announcement shows that in the future, Ford is expected to provide the joint venture company with: 1) professional managers; 2) technical licensing and support: global solutions for intelligent networking and data analysis; and 3) Ford brand common procurement platform for new energy electrified parts. We believe that Ford's support is expected to make up for Zhongtai's shortcomings, and the future joint venture platform models are worth looking forward to, and Zhongtai is expected to benefit from it.
Investment suggestion: the company's EPS from 2017 to 2019 is expected to be 0.64,0.99,1.18 yuan respectively, corresponding to 21 times, 14 times and 12 times PE respectively, maintaining the "buy-A" rating.
Risk hint: the progress of the establishment of the joint venture company may be lower than expected; sales such as T700 may be lower than expected.
