The automobile industry is picking up, and the heavy truck market continues to improve:
According to the China Association of Automobile Manufacturers, the overall automobile production and sales volume in China showed a slight increase in 2017:
Production and sales reached 29.01 million vehicles and 28.88 million units respectively, up 3.19% and 3.04% respectively over the previous year. Compared with passenger cars, commercial vehicles showed a clear growth trend. Production and sales reached 2,826 million units and 2.73 million units respectively, up 13.96% and 11.25% respectively over the previous year. A total of 1,117 million commercial and heavy trucks were sold, an increase of 52.38% over the previous year. Heavy trucks maintained the high growth of 2017 in the first quarter of 2018, with production of 310,000 units in the first quarter, up 10.2% year on year; sales volume was 320,000 units, up 13.85% year on year. Benefiting from this, the company's heavy truck parts segment sales increased dramatically, and the passenger car parts sector also grew steadily.
The auto parts sector's performance has increased rapidly, and we can look forward to in the future:
As a leader in the domestic non-tire rubber products segment, the company has simultaneous development and modular supply capabilities. The company's auto parts sector takes a world-class manufacturing company as its development vision, actively develops new products, caters to the wave of reform in the automotive industry, and its market share continues to increase. Thanks to a sharp recovery in sales in the domestic heavy truck market in 2017, both revenue and profit increased. In 2017, revenue was 1,236 million yuan, accounting for 31.80% of revenue, an increase of 39.78% over the previous year, contributing 471 million yuan to gross profit, accounting for 35.44%. The domestic heavy truck market maintained a high growth trend in 2018, and the company's auto parts sector performance can be expected to grow.
Seize the automotive aftermarket and keep up with the development direction of the industry:
The company is committed to building an “Internet+Automobile Aftermarket” and will build an “Internet+Industrial+Finance” mixed industry company in the future. At the end of 2014, a subsidiary “Advanced Polymer Materials” was established to focus on R&D, design or manufacture of system-integrated suspension products, modified engineering plastics, shock-absorbing and noise-reducing elastic products, and fluid pipeline products. Seize market opportunities and share trillion-level automotive aftermarket dividends. The company's automotive aftermarket business is still in the development stage. With the construction and improvement of the logistics system, it may become a new performance growth point in the future.
The ecological garden sector has sufficient orders in hand, and performance growth is strong:
The company's garden sector closely followed the PPP market, and newly signed projects continued to drive revenue growth. In 2017, the sector achieved a total revenue of 2,626 million yuan, accounting for 67.53% of revenue, an increase of 28.01% over the previous year, and contributed 856 million yuan to gross profit, accounting for 64.41%. In the first quarter of 2018, Saishi Garden, a wholly-owned subsidiary, signed a new contract amount (including design) of 117 million yuan, won the bid for unsigned orders of 341 million yuan, and the cumulative amount of unfinished orders signed was 5.421 billion yuan. Corresponding to 2017 garden sector revenue, the order revenue guarantee ratio was more than double.
The company's garden sector has sufficient orders in hand, and its future performance will grow rapidly and is full of momentum.
Financial forecast and valuation: The company is expected to achieve net profit of 879/12.30/1,659 million yuan from 2018 to 2020, an increase of 44.3%/39.9%/34.8% over the previous year. The corresponding EPS is 1.09/1.52/2.05 yuan. The current stock price corresponds to the 2018-2020 PE of 7/5/3.7 times, maintaining the “Highly Recommended” rating.
Risk warning: PPP business model risk, extension expansion risk, repayment risk, etc.