First, the introduction of the fixed increase project:
The non-public offering is planned for no more than 35 specific targets, the offering price is not less than 80% of the average stock trading price for 20 trading days before the pricing benchmark, and the number of shares is determined according to the total amount of funds raised divided by the issue price, and no more than 210.333 million shares (including capital), and the total amount of funds raised shall not exceed RMB 710 million yuan.
II. Fund-raising projects
The construction period of the project is 2 years. After the full production is reached, the production capacity of forged aluminum alloy wheels will be increased by 1.25 million pieces per year. According to the company's fixed increase plan, it is conservatively estimated that the company's annual sales revenue will exceed 1 billion yuan after the project reaches production, and the annual net profit will exceed 100 million yuan. The company said that its forged aluminum wheel customer development is good. In China, we have successively obtained orders from Xiamen Jinlong and other car factories; with the promotion of international certification of forged aluminum wheel products, we have also opened up certain target customers in the international market. In addition, the company is also speeding up the R & D and innovation of forged aluminum wheels and constantly optimizing the product structure to meet the diversified needs of customers.
Introduction of the company
The company is a large domestic steel products group enterprise, with steel structure and automobile wheel research and development, design, production and sales as the main business. Steel structure products mainly include building steel structure and equipment steel structure; automobile wheel products include tubeless steel wheel, section steel wheel and forged aluminum wheel. The two major businesses accounted for 40.41% and 50.74% of revenue in 2019, respectively.
Affected by the situation at home and abroad, the performance has entered a lacklustre period after rapid growth in the previous two years. From 2017 to 2019, the company realized revenue of 19.91,29.02 and 2.636 billion yuan respectively, with a growth rate of 40.72%, 45.75% and 9.61%, respectively, and realized net profit of 0.68 × 0.82 million yuan, respectively, with a year-on-year growth rate of-1.45%, 20.29% and 0.96% respectively.
Due to the large proportion of overseas sales of the company's two major businesses, in the past three years, the export proportion of wheel products accounted for more than half, and the export proportion of steel structure products was about 1/3. Sino-US trade friction has brought a certain degree of impact on the company's steel rings and steel structure products, especially the United States, Europe and other countries have initiated anti-dumping and countervailing investigations against some sizes of steel rings and steel structures produced in China. The company's gross profit margin in 2019 is 12.8%, and its operating profit margin is 5.24%, both of which are lower than the median comparable steel structure listed companies. In 2020, under the impact of the epidemic, the company achieved operating income of 1.309 billion yuan in the first half of the year, an increase of 3.27% over the same period last year, and its net profit was 39 million yuan, down 9.06% from the same period last year.
IV. Core logic
1) the auto industry has recovered somewhat, and the accessories end may be expected to improve. Since the second quarter of 2020, with the improvement of the epidemic prevention and control situation, the resumption of work and production has been gradually promoted, superimposed by a series of favorable policies, which has stimulated the release of car demand to a certain extent, and the car production, sales and inventory situation have improved to a certain extent. Auto production and sales have achieved positive year-on-year growth for five consecutive months, and May-August sales have all exceeded 10% compared with the same period last year. With the improvement of automobile production and sales, the pressure on the revenue end of spare parts is alleviated. The end of automobile-related accessories may be expected to be improved accordingly.
Affected by the overseas epidemic, the company's exports declined in the first half of 2020. On the one hand, the company adjusts the layout in time, grasps the market opportunity of promoting new energy vehicles and eliminating three trucks in China, and rapidly expands the domestic OE market share by virtue of the lightweight steel wheel sales experience and complete industrial chain advantages accumulated in European and American markets. On the other hand, the company deeply cultivates the customer relationship, gives business support to customers for many years, and links the upstream and downstream industrial chains to overcome difficulties and maintain sustainable development. During the reporting period, the company's automobile steel wheel business achieved an operating income of 576.75 million yuan, an increase of 0.73% over the same period last year, of which the domestic OE market increased by 82.44%, making up for the decrease in exports caused by the epidemic.
2) the prosperity of the steel structure industry is upward, which is good for the company's capital, valuation and performance to a certain extent. The promotion of prefabricated buildings promotes the permeability of steel structures, and there is a high demand for steel structures in many emerging industries, such as high-end logistics, new energy vehicles, environmental protection and so on. Moreover, the steel structure is also widely used in public buildings, airports and railway stations, which is closely related to the looseness of fiscal policy. The company's steel structure business has made outstanding achievements in large-scale industrial plants, rail transit, large-scale public buildings and petrochemical steel structures, and has established good cooperative relations with China Construction Group, China Petroleum & Chemical Corp Construction, Petrochina Company Limited Engineering, China Power Investment Yuanda, China Railway and other large-scale EPC. In the first half of 2020, the company's steel structure business continued to cultivate large industrial plants and subdivisions such as municipal / bridge and rail transit, with good order growth and continued implementation and a series of new domestic projects. Although the company and the upstream and downstream industrial chains were delayed by the epidemic, thanks to the increase in investment in national infrastructure construction and remarkable achievements in epidemic prevention and control, the domestic steel structure business situation was relatively good, with an operating income of 619.2 million yuan in the first half of the year, an increase of 3.49 percent over the same period last year.
V. performance forecast
Although the automotive and construction industries in the downstream industries of the company show signs of recovery or stabilization, considering that the COVID-19 epidemic may continue to affect both at home and abroad for a long time, the company's shift of sales focus to the domestic practice may only be enough to offset part of the loss. It is estimated that in 2020-2022, the company's net profit belonging to shareholders of listed companies will be 0.80amp 0.96 billion yuan. The EPS is 0.11, 0.13 and 0.15 yuan respectively. Corresponding to the closing price of 3.57 yuan on September 28, the PE is 23.8 times higher than that of 32.4 + 27.4.
VI. Suggestions for participation
Participation is not recommended. The company is a leading automotive steel wheel manufacturer in China, although the prosperity of the automotive industry shows signs of recovery, but the overseas situation is not very clear in the next two years, the company's overseas market may have a greater impact, lack of room for improvement in performance. Although the forecast income of this fixed increase is good, the actual input-output effect is uncertain. And the volume of the company's steel structure is relatively small compared with the same industry, and the competitive advantage is not obvious.
VII. Investment risk
The implementation of the project is lower than expected; the sales volume of the automobile industry is lower than expected, and the demand for steel structure is lower than expected.