The target price is 31.65 yuan, maintaining the “buy” rating
Ecolan released its semi-annual report. In 2023, H1 achieved revenue of 511 million yuan (yoy +17.25%), net profit of 15.3 million yuan (yoy -32.95%), minus non-net profit of 30,000 yuan (yoy -99.63%). Among them, Q2 achieved revenue of 265 million yuan (yoy +28.64%, qoq +7.38%) and net profit of 6.95 million yuan (yoy -29.25%, qoq -16.78%). We expect the company's EPS to be 0.82, 2.07, and 3.56 yuan respectively in 2023-2025 (previous values were 1.11, 2.53, and 4.14 yuan in 2023-2025). Comparable companies, Wind unanimously expected an average PE value of 32.2 times in '23, leading the company's market development and technology research and development, and high performance flexibility. It gave the company 38.6 times PE in '23, a target price of 31.65 yuan (converted to the current value of previous share capital of 36.93 yuan), maintaining the “buy” rating.
Commercial vehicle sales volume was +16% year-on-year, and 1H23, Akelan accounted for 17%. According to statistics from the China Association of Automobile Manufacturers, in the first half of 2023, commercial vehicle production and sales completed 1,967 million units and 1,971 million units, respectively, up 16.9% and 15.8% from the previous year. The company's main product application areas have achieved horizontal expansion from light firewood to heavy firewood, from road to off-road, land transportation to ships, and from traditional internal combustion engines to hybrids. Customers include Quanchai Power, Yuchai Machinery, Sinotruk, 31-Yitz, Changfa Agricultural, Guangchai, CSSC Anchai, Weichai Heavy Machinery, and Xichai. As of June 30, the market share of the company's main products in light diesel trucks was 17.12%, up 0.12% from the end of last year.
The comprehensive upgrade of emission standards is expected to drive the company's performance growth
Since July 1, 2023, the national automobile emission standard stage 6b has been fully implemented nationwide; implementation of the national automobile standard four standard will begin on December 1, 2022; and the national shipping standard two will be implemented on July 1, 2022. From January to June 2023, in the road sector, the company added 23 projects, of which 4 have been converted, 10 are awaiting conversion, and 9 are under development; in the non-road sector, the company has added 17 projects, of which 12 have been converted, 2 are awaiting conversion, and 3 are under development; in the shipping sector, the company has added 5 new customers and received orders for 59 units/set. The company has mastered the core technology of exhaust post-treatment, and the implementation of national six and non-fourth class emission standards is expected to drive the company's performance growth.
Overseas market demand and sales are relatively stable
In 2021, the company acquired 100% of ABF's shares in cash. ABF, formerly known as the core department of Continental Europe Group responsible for the development and production of urea pumps, has a complete development team and comprehensive technology, and has a good reputation in the industry. ABF achieved sales revenue of 219.210 million yuan in 21-22, and overseas market demand and sales were relatively stable.
Risk warning: The rise in prosperity in the commercial vehicle industry fell short of expectations, sales of non-road products fell short of expectations, and the localization process of diesel engine products in Country 6 fell short of expectations.