Guide to this report:
The company's performance for the first 3 quarters of 2022 was in line with expectations. The company's fund-raising projects are progressing steadily, and quarterly revenue continues to rise.
We expect the company's performance to continue to rise as the company's production capacity rises and the die-casting production line is put into operation.
Investment points:
Maintain ratings to increase holdings. In the first three quarters of 2022, the company achieved revenue of 7.542 billion yuan, up 6.75% year on year; realized net profit of 213 million yuan, down 16.12% year on year. The company's performance was in line with expectations. Considering the impact of the epidemic on the company's transportation, the company's EPS for 2022-2024 was lowered to 0.67/0.96/1.19 yuan (originally 0.94/1.19/1.44 yuan), corresponding to a net profit of 29/416/518 million yuan. Considering the valuation adjustments of comparable companies in the industry and the increase brought about by the company's fundraising projects, referring to similar companies, the company was given a valuation of 30 times PE in 2022, lowered the company's target price to 20.1 yuan (originally 23.5 yuan), and maintained the “increase in holdings” rating.
The pandemic affected transportation, which gradually recovered in the 3rd quarter. The spread of the national epidemic in the 1-2 quarter affected the transportation and sales of the company's production bases in the Yangtze River Delta and Changchun regions, and the company's performance was adversely affected. Since the third quarter, the impact of the epidemic on the company's sales has weakened. The company's Q3 revenue for a single quarter was 2,962 billion yuan, the best level in a single quarter since 21 years. The company currently has a processing and distribution capacity of 1 million tons, and the raised production capacity of 670,000 tons will be gradually released in 22-23. We expect the company's performance to follow the increase in production.
The aluminum die casting business continues to advance. The company plans to privately issue no more than 130 million shares for aluminum die-casting and new energy vehicle board projects. The non-public offering was approved by the Securities Regulatory Commission at the end of July. The company's aluminum die-casting project is located in Shucheng County, Anhui, which has transportation advantages. We expect that after the company's private offering is completed, the aluminum die casting project will accelerate, and aluminum die casting will open up a second growth curve for the company.
A leader in automotive steel processing and distribution, with stable profitability. The company is an automobile steel processing and distribution enterprise rather than a steel trading enterprise. The company directly serves downstream terminals, and its profitability is stable. The profitability of the company's NEV board project is strong, and we expect that the commissioning of this project will boost the company's profitability.
Risk warning: Fund-raising projects have fallen short of expectations, and sales of new energy vehicles have declined sharply.