Events:

Zhongtai Ford sets up a ride-hailing joint venture

The company signed a "joint venture contract" with Ford Motor in Shanghai, China, with an investment of US $10 million each to form a joint venture "Zhongtai Ford Intelligent Travel Technology Co., Ltd." to provide customers with optimized transportation-related business and in-vehicle service experience, by sharing data and providing more innovative technologies and services to help cities improve their intelligent transportation planning.

Core ideas:

Pure electric ride-hailing reduces operating costs and increases industry vitality.

It is reported that the ride-hailing joint venture will use pure electric models, and Zhongtai Z500EV will be used as the first model for online ride-hailing operators and drivers. Zhongtai Z500EV has a range of 330km under comprehensive operating conditions, and will be equipped with in-car infotainment system and intelligent Internet connection function to support ride-hailing service. The upgraded Zhongtai Z500EV Pro will also be officially launched in October.

A large part of the daily expenditure of traditional fuel-fired cars comes from fuel consumption, by contrast, the electricity cost of electric cars is much lower. Especially for car-hailing owners, the average daily mileage is far higher than that of ordinary car owners, and the economic demand of operation is more prominent. Zhongtai Motors launched pure electric ride-hailing for rental, on the one hand, it reduces the initial investment of drivers engaged in online car-hailing, on the other hand, it increases the marginal income of drivers' average daily mileage, thus stimulating supply and increasing the vitality of the industry.

Increasing supply and improving the environment of online car-hailing market

Since the beginning of this year, the ride-hailing leader DiDi Global Inc. 's ride-sharing has suffered several female victims one after another, and ride-hailing safety has become the focus of social attention. Since then, DiDi Global Inc. stopped the operation of express cars and chauffeured cars at night, which is suspected of testing the market and the government, and objectively harmed the rights and interests of consumers. In addition, the price increases in rainy days and busy hours reflect DiDi Global Inc. 's strong position as a supplier.

We believe that the essential reason why hitchhiking incidents occur from time to time is that the industry is in short supply, which makes the qualification examination a mere formality. The fundamental solution lies in standardizing the market access system of ride-hailing, increasing the supply of ride-hailing and training full-time ride-hailing drivers. Encouraging more enterprises, especially car companies, to enter the ride-hailing market is of great significance to improve the market environment, balance the contradiction between supply and demand, and reduce monopoly power.

Profit Forecast and Investment rating

We estimate that the EPS of the company from 2018 to 2020 is 0.65,0.73 and 0.80 yuan respectively, and the corresponding dynamic price-to-earnings ratio is 8.21,7.34 and 6.64 times, respectively. Give a "cautious recommendation" investment rating.

Risk hint

Car sales fell short of expectations.