Forlander: China's leading steel logistics supply chain company
The company is a leading domestic steel logistics supply chain enterprise. It mainly provides complete metal sheet supply chain services for middle and high-end automobile, home appliance and other industry enterprises or their supporting manufacturers. The company has built a business layout of “nine major production bases, covering the whole country's marketing network”; as of 23H1, the seven major processing and production bases have a total of 48 production lines and a production capacity of 2 million tons; the “NEV plate project” and “NEV aluminum die-casting project” production bases are about to be put into operation. Compared with the multi-level distribution business model of steel traders, the company's supply chain system has the characteristics of high transaction efficiency, high profit margin, and low market risk. The upstream of the company has established stable strategic partnerships with various steel companies such as Baowu Steel Group, and downstream serves suppliers of well-known domestic and foreign vehicle brands such as SAIC Volkswagen, Volvo, and Geely Automobile.
Traditional automotive panels: Bases have been put into production one after another, highlighting the leading position in the industry
According to estimates, we estimate that the country will use 23.48 million tons of automotive panels in '22, of which 9.8 million tons will be distributed. The overall scale is relatively stable. As the IPO fund-raising project (Wuhan/Kaifeng/Ningde production base) was put into operation in '21, the company's production capacity expanded rapidly, and the overall volume of goods operated maintained a high rate of growth.
We estimate that the company's sales volume in '22 is 1.79 million tons, and the market share is expected to be 12.5%, highlighting its leading position in the industry. Meanwhile, the construction of the company's “New Energy Vehicle Board Production Base Project” plant in Anhui was completed in the first half of '23, and has already entered the trial production stage. The company's production capacity has been further increased, and automobile board sales in relevant regions are expected to grow rapidly.
Aluminum die-casting business: the project is about to be put into production, increasing profit elasticity
Driven by policy and electrification, China's automotive aluminum alloy market is expected to develop rapidly. We expect the demand for automotive aluminum die casting to be about 3.55 million tons in '25, with a compound growth rate of about 9% in 22-25. At the same time, the market concentration of the automotive die casting industry is low, and the market share of leading companies has a lot of room for improvement. Companies with integrated die-casting technology are expected to stand out. The company privately raised capital to invest 20,000 tons in the “New Energy Vehicle Aluminum Die-casting Construction Project” in '22. At present, the main equipment of the die-casting island has been installed, and in the future, it will be officially put into production according to actual progress. The company's aluminum die-casting products focus on car body structural chassis with low permeability and high growth space; at the same time, the strategic location is in Hefei, and the industrial cluster brings broad market demand to the company's business. The company currently cooperates with automobile manufacturers such as BYD and NIO in the automotive board business, and has set up a joint venture with Chery to improve the layout of the NEV industry. The scope of business is expected to be further expanded to aluminum die-casting products. We expect the revenue of the aluminum die-casting project in 24-26 to be 494/79/988 million yuan, increasing the company's net profit by 0.44/0.78/99 million yuan.
First coverage, giving a “buy” rating.
We expect the company's revenue in 23-25 to be 100.74, 120.79, and 14.113 billion yuan, with a year-on-year growth rate of -3%, +20%, and +17%; net profit of 4.04, 5.28, and 647 million yuan, up 32%, 31%, and 23% year on year. Referring to comparable company valuations, the traditional business and aluminum die-casting business were given PE valuations of 17x and 25x for 24 years respectively; the corresponding target stock price was 18.91 yuan/share.
Risk warning: Market competition intensifies, and automobile sheet sales fall short of expectations; steel raw material prices fluctuate greatly; risk of inventory price decline; customer expansion of aluminum die-casting products falls short of expectations; estimates are subjective.