Key points of investment
Next Tuesday (March 26), a GEM listed company “Hongxin Technology” will ask for a quote.
Hongxin Technology (301539): The company's main business is the R&D, design, manufacture and sale of forged aluminum alloy wheels for automobiles. The main products include commercial vehicle wheels and passenger car wheels. In 2021-2023, the company achieved revenue of 947 million yuan/956 million yuan/965 million yuan respectively; YOY was 53.38%/1.03%/0.87%, and the three-year compound annual growth rate of 16.05%; net profit to mother was 68 million yuan/72 million yuan/75 million yuan, YOY was 30.67%/6.39%/2.83%, and the three-year compound annual growth rate of net profit to mother was 12.65%. According to the company's management's preliminary forecast, the company's revenue for January-January 2024 is estimated to be about 209 million yuan to 229 million yuan, up 7.09% to 17.34% year on year; net profit from January to January 2024 is estimated to be about 12.95 million yuan to 14.95 million yuan, an increase of 3.11% to 19.04% year on year.
Investment highlights: 1. The company is one of the core suppliers of forged aluminum alloy wheels in the market segment; during the reporting period, the company further promoted cooperation with mainstream European commercial vehicle manufacturers and built a new production base in Thailand, which may help stabilize the company's existing competitive advantage. Domestic aluminum alloy wheel manufacturers mainly cast aluminum alloy. The company is one of the few domestic manufacturers that started early and achieved large-scale production of forged aluminum alloy wheels. After more than ten years of development, the company's products have directly supported domestic automakers or tier 1 suppliers such as Howmet, Dongfeng Liuqi, Sinotruk, BYD, CRRC, etc.; overseas, the company supplies after-sales systems to vehicle manufacturers such as Daimler through WheelPros, and has formed good cooperative relationships with well-known brands such as American Wheels, FleetPride, and Forgiato, and has become one of the few internationally competitive enterprises in this segment. Currently, the company is actively promoting cooperation with mainstream European commercial vehicle manufacturers. The three specification products passed the strictest LBF wheel biaxial fatigue test in the industry in 2021 and are now in the R&D and sample delivery stage. At the same time, the company's production base in Thailand is under construction, or mitigates the risks caused by foreign trade frictions to a certain extent. 2. The company's forged aluminum alloy wheels have a strong alternative advantage to commercial vehicle steel wheels. At the same time, they are more suited to the lightweight needs of new energy passenger vehicles than cast aluminum alloy wheels. Aluminum alloy wheels have a stronger weight reduction effect than steel wheels, and can reduce automobile energy consumption. Currently, 90% of the wheels in China's commercial vehicle supporting market are steel wheels. As the environmental pressure to save energy and reduce emissions increases, the replacement demand for commercial vehicle steel wheels is more urgent. However, in passenger cars, although cast aluminum alloy wheels have become widely used, along with the development of automobiles towards electrification. New energy vehicles have higher requirements for battery life, instant acceleration capability, etc., and materials such as forged aluminum alloy need to be used to further improve their weight reduction effects. Since 2011, the company has carried out in-depth lightweight research on forged aluminum alloy wheels. In 2018, the forged aluminum alloy wheels independently developed by the company have better mechanical properties than ductile iron wheels, and the product weight can be reduced by more than 50%. At the same time, according to the company's inquiry letter, the weight of forged aluminum alloy wheels is 20%-25% lighter than the same cast aluminum alloy wheels. As a manufacturer that already has strong R&D capabilities and high-quality customer resources in the field of forged aluminum alloy wheels, the company may be expected to benefit from the future development needs of automobile energy saving and electrification.
Comparison of listed companies in the same industry: The company focuses on the field of automobile forged aluminum alloy wheels; considering product types and downstream application areas, Wanfeng Aowei, Lizhong Group, Yueling Co., Ltd., Jinfei Kaida, and Disheng Li were selected as comparable listed companies of Hongxin Technology. Looking at the comparable companies mentioned above, the average revenue of comparable companies from the fourth quarter of 2022 to the third quarter of 2023 was 9.119 billion yuan, comparable PE-TTM (excluding negative values/arithmetic average) was 28.68X, and gross sales margin was 10.93%. In comparison, the company's revenue scale is below the average of comparable companies, and the gross sales margin is in the middle to high range of the same industry.
Risk warning: There is still a possibility that companies that have begun the inquiry process will not be able to go public due to special reasons; company content is mainly based on the content of prospectus and other public information; there is a risk that the selection of listed companies in the same industry is not accurate enough; there may be interpretation deviations in the selection of content data. The specific risks of listed companies are shown in the text.