Wuling Automobile Group Co., Ltd. (305 HK), hereinafter referred to as Wuling Automobile and the Company, organized field research activities at the headquarters base in Liuzhou, Guangxi Province. The participating investors had in-depth exchanges with company executives at various levels. The main points of our research and company public information are as follows:
The controlling shareholder and its own business foundation is solid, and the industrial layout is perfect.
Wuling Automobile is the main body of Guangxi Automobile Group listed in Hong Kong, and its controlling shareholder Guangxi Automobile Group is an enterprise directly under the government of Guangxi Autonomous region, with a history dating back to 1958. It has the ability to design, develop and manufacture cars, auto parts, engines and special-purpose vehicles, and has a synchronous R & D system, intelligent manufacturing, resource integration and complete marketing network. With an operating income of RMB 21 billion in 2018, the Group is one of the top 30 companies in China's automobile industry and one of China's top 500 manufacturing enterprises. In the same period, Wuling Motor's operating income was 15.12 billion yuan. The company's main business is the manufacture and sales of auto parts, engines and special purpose vehicles, and has the qualification to produce electric logistics vehicles. SAIC GM Wuling is the company's main and long-term partner, and the company's special purpose vehicle division accounts for more than 60% of the market. The company's manufacturing bases include Liuzhou, Qingdao, Chongqing, Indonesia, Guiyang and India. In view of the national Belt and Road Initiative strategy and the vigorous development of domestic new energy vehicles, the company has layout in advance.
Actively introduce international leading technology to improve product efficiency
The company actively cooperates with leading enterprises at home and abroad, introduces international advanced technology, accelerates the transformation of product upgrading, strides forward to the field of high-end passenger cars, and improves product efficiency. The company established a joint venture car seat and interior company with Virginia, the third largest seat manufacturer in the world, signed a strategic agreement with ABB Engineering Co., Ltd., established Liuzhou Zhenxu Electronic Control Technology Co., Ltd., and Foggia in the business field of Green Intelligence Bank prepared to set up Foggia (Liuzhou) exhaust Control Technology Co., Ltd., and established Liuzhou Meiqiao Transmission system Co., Ltd. in a joint venture with American Axle Manufacturing International Co., Ltd. In addition, based on the consideration of the profit level and structure of the business and market segments, we are positive about the company's strategy to gradually shift the focus of the parts and engine business from the mini commercial vehicle division to the passenger vehicle. it is believed that this strategy will help to improve the profitability of the core segment.
To meet the needs of the market, the special vehicle business is the growth point.
The department of special purpose vehicles and the field of new energy vehicles have sustained growth momentum, and the company has laid out and implemented marketing earlier. We are optimistic about the growth of demand in the special-purpose vehicle market, as well as the reputation, brand value and business structure improvement opportunities of the company's special-purpose vehicles in the market segment. The company's special purpose vehicle division is currently equipped with a comprehensive automobile assembly line, covering welding, painting and assembly processes, which can produce more than 100 different types of specially designed vehicle models to meet the specific needs of customers. In 2018, the total income of the special purpose vehicle division operated by Wuling Industry (61% of Wuling Automobile Holdings) (based on external sales) was about 4.2 billion yuan, an increase of 48.2% over the same period last year.
Risk hint
(1) the higher-than-expected deterioration of production and consumption in the automobile industry, (2) inter-industry competition and increasing pressure on profit margins