Investment summary

The steamwheel+motorcycle business continues to grow, underpinning the company's basic market

The company's aluminum alloy steam turbine business actively transformed into new energy customers, and shipments recovered rapidly. In 2022, sales reached 18.7044 million units, +18.86% over the same period, and the capacity utilization rate reached 94.92%; the motorcycle business focused on breaking through major motorcycle sales markets such as India and Indonesia.

The penetration rate of magnesium alloys in the auto parts sector continues to rise, supporting the company's mid-term development. The company is the world's largest supplier of magnesium alloys, and its technical advantages are obvious. As the weight reduction of automobiles continues to advance and the price difference between magnesium and aluminum narrows, the magnesium alloy business is expected to support the company's mid-term development.

The card slot navigation market has broad room for future growth

The domestic general aviation market is just getting started, and there is great potential for development. The company acquired Diamond Aircraft to become a global leader in general aviation. Currently, the company is collaborating to develop overseas and domestic markets. 2023H1 achieved revenue of 1,280 billion yuan, an increase of 48.62% over the previous year, accounting for 17.05% of overall revenue.

The low-altitude economy is poised to take off, and eVTOL has broad prospects. The implementation of the low-altitude navigation policy is driving the industrialization process of eVTOLs to accelerate. According to Roland Berger's forecast, the number of manned eVTOLs in operation worldwide is expected to reach 160,000 in 2050. The Wanfeng Diamond eDA40 pure electric aircraft has successfully flew for the first time. It is the world's first electric aircraft with DC fast charging function to apply for EASA/FAA Part 23 certification. Subsequent companies will gradually commercialize the eVTOL project according to market demand.

Investment advice

We expect the company to achieve revenue of 167.24/178.02/19.685 billion yuan in 2023-2025, respectively; +2.09%/+6.44%/+10.58% year-on-year; net profit to mother of 7.10/9.81/1,217 billion yuan, respectively, -12.21%/+38.12%/+24.05% year-on-year respectively; corresponding to the current market value PE is 21.40X/15.50X/12.49X, respectively. First coverage, giving a “buy” rating.

Risk warning

The risk of macroeconomic and industry fluctuations; the risk of barriers to international trade; the risk of fluctuations in raw materials and energy prices and rising labor costs; the risk of exchange rate fluctuations; the risk of domestic air space not being as open as expected.