Incident: The company announced on December 10 that Chairman Jiao Chengyao proposed using centralized bidding transactions to repurchase the company's shares at a price not exceeding 13 yuan/share. The total repurchase capital was 300 million yuan to 600 million yuan, originating from the company's own capital.
The repurchase of shares will be used for equity incentives or employee stock ownership plans, etc. This repurchase is conducive to consolidating confidence in the company's future continuous and stable development and recognition of the company's value, enhancing investor confidence, improving the company's long-term incentive mechanism, stimulating employee vitality, and promoting the company's healthy and sustainable development. We are optimistic about the company's future long-term development.
The state issued a draft for comments, and coal mine production capacity reserves need to be increased urgently. On December 6, 2023, the National Development and Reform Commission issued the “Implementation Opinions on Establishing a Coal Mine Capacity Reserve System (Draft for Comments)”, proposing that efforts should be made to form a schedulable production capacity reserve of 300 million tons/year by 2030. For coal mines that have declared construction reserve capacity, no less than 3 million tons/year in terms of design capacity, 100 eligible coal mines are required to reserve production capacity. As a leading enterprise in the coal machinery field, the company is expected to benefit fully. 1) The hydraulic bracket is the most used and valuable mechanical equipment in comprehensive mining equipment. It is used to support and control the roof of the coal mine work surface, isolate the empty mining area, prevent the gangue from entering the work surface, and ensure the working space. The main economic indicators of the company's coal mining machinery sector have been leading the industry for more than ten years, and the domestic market share has remained above 30%. Comprehensive coal mining machinery products have been exported to Russia, the United States, Australia, Turkey, India, Vietnam and other countries. 2) In the field of intelligence, Hengda's intelligent control products, the company's holding subsidiary, mainly include intelligent control systems for coal mining such as hydraulic control systems, electrohydraulic control systems, intelligent liquid supply systems, and intelligent integrated control systems.
Entering the auto zero business from a high starting point, we expect a gradual increase in the number of new energy vehicle parts. The company's auto parts industry sector was integrated through mergers and acquisitions in 2016, including the auto parts sector and the automobile motor sector. The company's auto parts industry segment has two major brands, German SEG Group and ASIMCO Group. Among them, 1) SEG has a complete product portfolio, covering passenger car and commercial vehicle starters, generators, start/stop motors, and light hybrid energy recovery systems (BRM). In 2023, the company achieved a new breakthrough in its 48VBRM second-generation product equipped with a self-developed inverter. Volvo has already mass-produced it in Europe and China. 2) ASIMCO's business covers the three major markets of commercial vehicles, passenger cars and new energy vehicles. The main products are power system components and chassis system components. Power system components include cylinder heads, piston rings, camshafts, and valve seats for commercial vehicle engines.
Investment suggestions: We expect the company to achieve revenue of 358.03, 399.69, and 44.379 billion yuan respectively in 23-25, and net profit of 32.55, 39.27, and 4.578 billion yuan, corresponding to PE6.65/5.51/4.73 times, respectively, and maintain the “recommended” rating.
Risk warning: risk of macroeconomic fluctuations, risk of downstream demand falling short of expectations, risk of bad debts on accounts receivable, risk of uncertainty in share repurchases