Key points of investment:
Furander is an excellent third-party plate logistics supply chain solution provider in China. It is committed to building an “ecological digital steel supply chain platform integrating industry and trade”. The company's main business is to provide complete metal sheet supply chain services for middle and high-end automotive, home appliance and other industry enterprises or their supporting manufacturers, including procurement, processing, warehousing, tailoring, packaging, transportation and distribution services, as well as corresponding technical support services. In order to build an efficient and collaborative plate supply chain service system, Furander has been striving to build an “ecological digital steel supply chain platform integrating industry and trade”.
Demand for plate supply in the automotive industry is strong, and delayed manufacturing demand and safety inventory pressure are expected to increase industry concentration. As automobile production increases year by year, steel consumption is rising year by year. According to Mysteel data, steel accounts for about 72% to 88% of the raw materials used to produce a car, and the automobile industry's steel consumption reached 55.3 million tons in 2022.
In order to effectively reduce safety inventory in the supply chain, increase the proportion of outsourcing in plate processing and warehousing, and at the same time, delay the execution of the plate cutting process until a relatively determined time point of the terminal order as much as possible, which can effectively reduce the level of safety inventory and waste disposal costs. Therefore, the shift of OEM's own board processing to a third party is a future trend. In this process, driven by “economies of scale”, the Matthew effect of third-party plate logistics supply chain companies is very prominent.
Strengthen the aluminum die-cast track to create a new growth point. In order to further implement the company's strategic layout to expand into the NEV industry and enhance the company's overall profitability, the company took Hefei's rapidly rising automobile industry as an opportunity to process and manufacture automobile body structural parts and chassis parts, invest in the construction of NEV aluminum die-casting construction projects in Shucheng County, Anhui, achieve support for Chery nearby, and radiate existing vehicle companies in Hefei and surrounding regions such as Jiangqi, NIO, Hefei, and Volkswagen Anhui, which have broad market prospects.
Investment analysis: In Q2-Q3 2023, the company's performance increased year-on-year. Based on the boom in production and sales in the automotive industry in 2023, we expect the company to perform well. We expect the company's net profit to be 414, 5.66, and 719 million yuan respectively in 2023-2025, with earnings per share of 0.84 yuan/share, 1.15 yuan/share, and 1.46 yuan/share, respectively. Based on the above profit forecast, the PE corresponding to the current market value is 12x, 9x, and 7x, respectively. Conservatively based on the 23-year performance forecast, we believe that the company's reasonable PE valuation ratio is 16x, and there is still room for more than 33% of the current market value. First coverage, currently giving a “buy” rating.
Risk warning: Major customer automobile production and sales fall short of expectations; steel prices fluctuate greatly; production safety accidents; integrated die-casting capacity utilization falls short of expectations.