Events:
Tieniu Group Co., Ltd., the controlling shareholder of the company, increased its holdings of 600000 shares of Zhongtai Automobile Co., Ltd. through the centralized bidding system of Shenzhen Stock Exchange on July 11, 2018, accounting for 0.03% of the company's total share capital, with an average transaction price of 6.85 yuan per share. the transaction amount is 4.134 million yuan, and plans to continue to increase the shareholding within 6 months after this increase, with a cumulative increase of no more than 2% of the company's total share capital (including this increase).
Comments:
1. The performance of the company is good, and the increase of major shareholders shows confidence. In the first quarter of 2018, the company achieved operating income of 5.446 billion yuan, an increase of 917% over the same period last year, and a net profit of 141 million yuan, an increase of 351.37% over the same period last year. At present, the price-to-book ratio of Zhongtai Automobile is only 0.83 < 1, which is undervalued. The increase of major shareholders demonstrates the firm confidence of major shareholders in the future development of the company, and is also expected to enhance the recognition of investors to the company.
2. Continue to improve the production capacity, and the company's sales increased by 45% in the first half of 2018 compared with the same period last year. The company sold a total of 154300 cars in the first six months of 2018, an increase of 45% over the same period last year. Among them, sales of SUV models are more eye-catching, with cumulative sales reaching 132352 vehicles, an increase of 70 per cent over the same period last year. Zhongtai automotive products have the following four characteristics to ensure rapid sales growth: first, excellent product power, Zhongtai will launch 10 new cars from 2018 to 2020, of which the company will launch four blockbuster models: T300EV, T500, T800 and T900 in 2018; second, good appearance, achieve the gorgeous transformation from imitation to independent design in appearance. Third, the configuration is rich, the newly listed models are rich in configuration, adding new technologies such as wireless charging, liquid crystal night vision system, electric suction doors, etc.; fourth, Zhongtai models often reduce dimension pricing, with obvious performance-to-price advantages.
3. Highly standardized suppliers, independent research and development of core components and pragmatic and efficient marketing platform protect the company's great-leap-forward development. Highly standardized suppliers: Zhongtai Automobile focuses on the global procurement system and actively establishes strategic partnerships with key suppliers. Germany's Bosch, Germany's Weibaster, Johnson of the United States, Yanfeng Perry and other international top suppliers have entered the Zhongtai Automobile supplier list. Independent research and development of engines and gearboxes: Jefu Transmission, a subsidiary of Tieniu Group, independently develops a 7-speed eDCT350, while Tongling Ruizhan Technology produces and develops engines, which will match Zhongtai-related models in the future. Pragmatic and efficient marketing platform: in 2016, Zhongtai had a total of 919 dealers, an increase of 34.7% over the same period last year. Zhongtai Automobile has established a long-term strategic cooperative relationship with dealers to help dealers improve business quality and service quality, and achieve a win-win situation with dealers.
4. The leading new energy company will join hands with Ford to set up a joint venture company to enhance the brand value and car-building technology. Ford Motor has invested 4.5 billion US dollars in the research and development of electric models and the production of electric vehicle products worldwide, and will launch 13 electric vehicles on the global market within five years. The cooperation between Zhongtai and Ford will improve the brand image and vehicle manufacturing level of Zhongtai.
5. It is estimated that the EPS from 2018 to 2020 will be 0.8,0.9,0.92 yuan respectively, and the corresponding PE will be 8.7,7.8,7.6 times respectively.
Risk hint: sales of new models are lower than expected; progress with Ford is slow.