The current situation of the company
Jiangling Ford's new SUV went on sale on the evening of January 22, with a guide price of 109800 to 167800 yuan. We are optimistic about the profit flexibility of the new model to the company's 19-year performance, and raise the 19-year profit forecast and target price.
Comment
In the next 3-5 years, Jiangling is expected to achieve a great-leap-forward development of annual sales from 300000 to 600000 vehicles. We expect that the long-term break-even point of a single car brand will be more than 300000 vehicles, and to become a competitive participant in the automobile industry chain, we need to reach the production and sales scale of more than 600000 vehicles. Otherwise, Jiangling, which is content with annual sales of 300,000 to 500,000 vehicles, will encounter difficulties in supply chain management, attracting talents, dealer network, brand building and so on in the long run.
In the next 3-5 years, the landing of the blue project is expected to make Jiangling Motor a global production base for cost-effective Ford brand SUV. Ford has previously ignored the great changes that the Chinese auto market is undergoing. At the strategic level, the "one One Ford" strategy can not adapt to the rapid changes in the Chinese auto market, and at the tactical level, it needs to solve the two major problems of products and cost. Building Jiangling Ford into a global production base of SUV with high performance-to-price ratio is the first step for Ford to reverse its decline in China.
We believe that Ford's reversal in the Chinese market will begin with Jiangling Ford, with the following specific measures: 1) defining products according to the preferences of Chinese consumers; 2) pricing according to the new price system; 3) using competitive independent low-cost suppliers as far as possible; 4) Ford National sales Organization (NDSD) will effectively solve Jiangling Ford's marketing and channel deficiencies. Considering that Jiangling's prudent accounting policy gives priority to R & D expenses, according to our elasticity test, if the leader's 19-year sales reach 10,000 vehicles in 3-4-5, the gross profit is about 20%. It is expected to bring Jiangling a gross profit increase of 100 million yuan in 6-8-10 and a net profit increase of more than 200 million yuan for the company.
Valuation proposal
According to the profit forecast issued by the company, we lowered the company's 18-year profit forecast by 12.1% to 91.83 million yuan. Taking into account the accounting policy of the company's expense front and the optimistic expectation of the leader, the company raised its 19-year profit forecast from 57.1% to 690 million yuan, and introduced a 20-year profit forecast of 1 billion yuan. Due to the uncertainty of leading sales and the development of the company's blue project, we temporarily maintain a neutral rating on the company's An and B shares, and we raise the A-share list price by 30% to 17.4 yuan (21% up space), corresponding to 1.2x Pmax B in 2019 (the current price corresponds to 1.0x 19e Pamp B). Due to the poor liquidity of B shares, the target price of B shares is maintained at HK $8.8 (19% room for growth), corresponding to 0.5 times 2019 P Big B.
Risk
Competition for light commercial vehicles intensified, leading sales fell short of expectations.