Company Overview:

The company is an auto parts enterprise specializing in the development, manufacture and sale of fuel systems for automobiles (mainly passenger cars). The products are mainly plastic fuel tanks and fuel pipes (refueling pipes) for passenger cars.

The controlling shareholder of the company is SDIC Hi-Tech, which holds 56.10% of the company's shares before issuance; the actual controller of the company is SDIC.

Status and prospects of the industry

Conventional fuel vehicles will be around for a long time. Although production and sales of new energy vehicles have grown rapidly in recent years, the penetration rate of new energy vehicles is still low. In 2017, China's NEV production and sales volume were 794,400 units and 777 million units respectively, accounting for only 2.74% and 2.69% of China's total automobile production and sales. Judging from the development plan of China's automobile industry, pure electric vehicles are one of the main development directions for new energy vehicles in China, while traditional fuel vehicles are developing with greater energy efficiency. Judging from the actual situation, while increasing research and development efforts for new energy vehicles, developing fuel saving technology for automobiles and reducing fuel consumption of traditional energy vehicles is still a realistic choice for car companies to cope with energy and environmental pressure.

New energy vehicles with fuel tanks have broad market space. One of the main development directions of new energy vehicles in China is pure electric vehicles. Pure electric vehicles do not need to be equipped with fuel tanks, and the company's traditional fuel tank business may be adversely affected. However, there are very few supporting facilities for pure electric vehicles, making it difficult to complete supporting construction in a short period of time, and they face certain technical problems, such as short driving range, few charging infrastructure, slow charging speed, and high acquisition costs. Over a long period of time to come, with the advancement of technology, the proportion of various new energy vehicles will gradually rise, but with the exception of pure electric vehicles and fuel cell vehicles, all other new energy vehicles require fuel tanks, and fuel tanks will continue to exist as automobile components for a long time to come.

Company highlights: China's leading plastic fuel tank company. Since its establishment, the company has been in the leading position of plastic fuel tank manufacturers in China. It is currently the largest automobile plastic fuel tank manufacturer. It is also the first independent brand enterprise in China that exports plastic fuel tank assemblies to foreign countries, exports plastic fuel tank manufacturing technology and builds plastic fuel tank production plants overseas. It has a world-class automotive fuel system research and development center. According to data from the China Association of Automobile Manufacturers, in 2017, the company and its holding subsidiaries sold a total of 9.5037 million plastic fuel tanks at home and abroad, of which 7,543 million plastic fuel tanks were sold in China, accounting for 30.41% of the total passenger car fuel tank market in China. The company holds five domestic subsidiaries and nine overseas subsidiaries. The company's customers include SAIC Volkswagen, SAIC-GM, FAW-VW, Changan Ford, Changan Ford, Changan Mazda, Guangqi Honda, Citroen Motor, Sichuan FAW Toyota, Dongfeng Nissan, Dongfeng Renault, etc., as well as domestic ventures with independent brands such as SAIC Motor Group, FAW Sedan, Changan Automobile, Chery, etc., as well as overseas companies with independent brands such as Chrysler, GM, Ford, Volkswagen, Volkswagen, the logo Citroen, Mercedes-Benz, etc.

Fundraising projects

1. It is proposed to use the raised capital of 52 million yuan for the Yantai branch project expansion project.

2. It is proposed to use 95 million yuan of raised capital for the Yangzhou Second Branch Project expansion project.

3. It is proposed to use the raised capital of 153 million yuan to build a new plant at the Changchun branch.

4. It is proposed to use 76 million yuan of raised capital for the Chongqing branch expansion project.

5. It is proposed to use the raised capital of 175 million yuan for a new plant project in Brazil.

6. It is proposed to use the raised capital of 61 million yuan for research and development center expansion projects.

Key Potential Risks

There is a risk that the company's operating performance will fluctuate due to the slowdown in the development of the automotive industry. In 2017, China's automobile production and sales totaled 29.0154 million vehicles and 28.88,900 units respectively, up 3.19% and 3.04% respectively over the same period last year. There is a possibility that the pace of development of China's automobile industry will slow down in the next few years. The company's product, the automobile plastic fuel tank, is a supporting product for the whole vehicle. If the development rate of the automobile industry slows down, the company's plastic fuel tank sales and the growth rate of the company's sales revenue may also slow down, which will have a certain impact on the company's development.

Offshore business risk. The company currently holds nine overseas subsidiaries, and may add new companies or factories overseas in the future according to the company's development and market competition. In the course of operation, the company's overseas subsidiaries may be affected by factors such as political turmoil in the host country, foreign exchange controls, sudden changes in economic policies, trade restrictions, and potential lawsuits with customers, poor customer development, and customer withdrawal from the local market, which adversely affects the company's operations.

valuations

The issuer's industry is the automobile manufacturing industry. As of April 20, 2018, the average static price-earnings ratio released by the China Securities Index for the most recent month was 18.06 times. The company's earnings per share in 2018 and 2019 are expected to be 0.79 yuan and 0.91 yuan respectively. Based on current market conditions, the initial pressure level of listing is expected to be 25-30 yuan.