The company is the domestic powertrain lubrication leader, customer resources are of high quality. The company's main products are engine oil pump, camshaft, transmission oil pump and transfer box oil pump. With high quality customer resources, the company has successively entered the global supply system of well-known main engine factories such as Ford, General Motors Co, Jaguar Land Rover, Peugeot Citroen, BMW and so on. and with Changan Ford, Shanghai GM, SAIC Group, Great Wall Motor, Jiangling Automobile, Geely Automobile, Chery Automobile and other domestic companies to establish a stable cooperative relationship.
Independent brand automobile resonance independent parts, core parts matching manufacturers give priority to benefit. The domestic auto parts industry has benefited from rapid growth in recent years, but key technologies such as powertrain and chassis electronic products still have a strong dependence on foreign investment. At present, the independent brand cars represented by Geely, SAIC and Great Wall are accelerating the pace of rise, and the independent brand cars resonate with independent parts. As the core parts and components supplier of the powertrain, the company will first benefit from the industry dividend.
The localization of the core parts of engine and transmission establishes the key position of the company industry. 1) engine oil pump: the global market space is nearly 13.5 billion yuan, and the company enters the supplier system of Ford, Jaguar Land Rover, GM, BMW and other first-tier brands, and is expected to continue to increase the market share in the future; 2) engine camshaft: the global market space is close to 24 billion yuan, the company's main customers are Changan Ford and Jiangling Motor, the company is expected to continue to develop new customers in China in the future. 3) Transmission oil pump: with the common growth of automatic transmission, the future market growth will exceed the average growth rate of the industry, which is expected to add new growth power for the company; 4) transfer tank oil pump: the main customers are Bogwarner and American axles. it is expected to continue to open up the American market in the future.
The use of IPO funds is clear, tamping the main business and steady growth. The company plans to issue no more than 50 million shares and raise 340 million yuan. According to the order, the funds raised in this issue will be invested in the "annual production of 1.2 million sets of energy-saving automobile engine pump project" and "supplementary liquidity project". The company's fixed increase projects meet the needs of market development, promote the company's industrial upgrading, and have a promising future development space.
Investment advice:
The company is the domestic powertrain lubrication leader, high-quality customer resources; master the core technology, benefit from the industry dividend brought by deep import substitution, and have a good future development. It is estimated that the operating income of the company from 2016 to 2018 is 1.27 billion yuan, 1.42 billion yuan and 1.64 billion yuan respectively, an increase of 14%, 12% and 15% respectively over the same period last year, and the net profit of returning home is 72 million yuan, 88 million yuan and 106 million yuan respectively.
Assuming that the number of shares issued is 50 million shares, the corresponding EPS for 17-18 years is 0.44 yuan and 0.53 yuan respectively. Give Shenglong shares 30-40 times PE for 17 years, give the target price 13.217.6 yuan per share, it is recommended to apply.
Risk hint: the macroeconomic environment is lower than market expectations, and domestic car sales are lower than market expectations.