Description of the event
Mr. Sun Yuan, the actual controller of the company, increased his holdings of the company's shares by 424,966 through centralized bidding through the Shanghai Stock Exchange trading system on February 7, 2024, accounting for 0.18% of the company's total share capital. At the same time, the company revealed the actual controller's subsequent plans to increase their holdings: the actual controllers, Mr. Sun Yuan and Ms. Zhu Qinghua, plan to increase their holdings of the company through centralized bidding with their own or self-funded funds within 6 months from February 7, 2024. The total amount of this increase in holdings is not less than RMB 30 million and no more than RMB 50 million (including the portion already increased).
Incident reviews
The company's products include precision parts for the manufacture of compressors, construction machinery, energy equipment, and food machinery. The company's business revolves around high-end manufacturing and precision manufacturing. It is mainly engaged in R&D, design, production and sales of high-precision mechanical parts and precision cavity mold products. It provides one-stop service from casting to finishing. It is currently a leader in high-quality custom machined castings and assembly parts in the global market.
The technical and quality advantages are obvious, and the added value of the product is high. In terms of technology, the company has developed a series of advantages in technical teams, technological innovation, collaborative development, technical cooperation, technical reserves, production processes, etc., to ensure that the company's technology and products are always in a leading position in the industry.
In terms of quality, after more than 20 years of intensive cultivation, the company has mastered industry-leading casting and machining technology, and has the ability to mass-produce high-volume high-precision parts with complex structures. With its own technical strength, the company participated in the R&D, design or improvement process of most of the customer's new products. The product customization characteristics are remarkable, and the added value of the product is high.
Production capacity has been released one after another, opening up room for long-term growth. The “High-precision Mechanical Parts Production and Construction Project” started on schedule and will be put into operation at the end of 2023. The production capacity bottleneck is expected to be broken.
At the same time, the company built a Mexican plant to meet the needs of downstream customers in the global supply chain, further enhance in-depth cooperation with downstream customers on a global scale, and achieve a production scale of 38,000 precision parts per year after delivery. Furthermore, the technical improvement project of Liyuan Jinhe, a holding subsidiary of the company, was successfully completed. By establishing a new resin sand casting production line, the project collaborated with the existing business of Liande Co., Ltd.
The actual controller's increase in holdings shows confidence in the company's long-term development. This increase in holdings is based on their firm confidence and recognition of the company's future stable development and intrinsic value, in order to protect investors' interests and enhance investor confidence, and fulfill their social responsibility as actual controllers of the company to promote the stable and healthy development of the capital market.
Profit forecasting and valuation
The foundry and casting finishing industry in developed countries is affected by factors such as labor costs, environmental costs, and downstream industry transfers. As a leader in machined castings and assembly parts in the global market, the company is expected to benefit from this and continue to deepen cooperation with major overseas customers. The company's revenue forecast for 2023-2025 is 12.84/15.49/1,864 billion, with year-on-year growth rates of 14.61%/20.57%/20.39%, respectively; the estimated net profit to mother is 2.73/3.33/ At 395 million yuan, the year-on-year growth rates were 10.00%/22.19%/18.72%, respectively. The company's 2023-2025 performance corresponding PE was 11.61/9.50/8.00 times, respectively. It was covered for the first time, and a “gain” rating was given.
Risk warning:
Compressor demand falls short of expected risk; development of large customers falls short of expected risk; production capacity climbing falls short of expected risk; policy risk.