Leading domestic precision cold forging parts, the downstream demand space is broad: the company's main products include valve set precision parts, valve transmission set precision parts, and other precision parts, etc., which are currently mainly used in automobile and motorcycle engines. Cold precision forging has the advantages of high processing accuracy, high production efficiency, high material utilization and good mechanical properties of forgings, etc., and has a wide range of downstream applications. Currently, the total amount of cold forging parts used for an ordinary car produced abroad is 40-45 kg, while in China it is less than 20 kg. With the development of the cold precision forging industry and the increase in national energy saving and emission reduction requirements, the Chinese automobile cold forging market has broad room for growth.
Expand other categories of precision components to open up room for growth: 1) New products such as high-pressure pump brakes, transmission parts, and body stabilization system parts have been delivered; 23H1 body chassis precision parts have been mass-produced, and overseas market expansion results have been remarkable; 2) Expand new energy vehicle products, including automotive carbon dioxide heat pump systems and integrated thermal management modules, electric drive systems, power battery system shells, etc., and precision electronic components related to autonomous driving; 3) The company has obtained patents for ball screw transmission structures used in parking brake systems, and the manufacturing process is excellent Converting and reducing costs is expected to contribute new growth points.
Overseas customers and projects have continued to expand, and the share of revenue has increased: the company is working simultaneously in overseas markets for commercial vehicles and passenger cars, and European and Mexican subsidiaries have laid out production capacity for hydraulic props, roller rockers, and high-pressure pump propellers, and began mass production and climbing in 20Q3 and 21Q4, respectively. The company has been designated and mass-produced by overseas customers such as Volkswagen of Germany, Volkswagen of Mexico, Volkswagen of Brazil, Deutz, and Stellantis. Along with business expansion, 22/23H1 achieved overseas revenue of 150/90 million yuan, accounting for 28%/33% of the main business revenue, and is expected to continue to grow in the future.
Investment advice: We expect the company to achieve net profit of 1.97/2.232/274 million in 2023-2025.
The corresponding PE was 17.60/14.94/12.65 times, respectively. It was covered for the first time, and a “gain” rating was given.
Risk warning: Downstream customer sales fall short of expectations, overseas factory production capacity falls short of expectations, new product development and promotion fall short of expectations, risk of fluctuating raw material prices, risk of exchange rate fluctuations, etc.