Matters:
The company issued a report on fixed increase issuance, with an issuance price of 11.83 yuan/share and a total capital raised of 1,183 billion yuan;? In addition, the company announced foreign investment and plans to invest 50 million euros to establish a new joint venture with Grammer in Germany to expand the global seat business of European OEMs such as BMW.
Commentary:
The fixed increase was successfully implemented, and it was actively subscribed. The current issue price was 11.83 yuan/share, with an issuance scale of 100 million shares, raising a total of 1,183 billion yuan and a net capital raised of 1,163 billion yuan. A total of 24 valid quotations were received in this offering, with a total subscription total of 5.107 billion yuan. In the end, 9 investors were distributed. The capital raised is mainly used for the “Hefei Automobile Interior Parts Production Base Project”, the “Changchun Car Seat Headrest, Armrest and Interior Parts Project”, and the “Ningbo Beilun Automobile Air Outlet R&D and Manufacturing Project with an annual output of 10 million sets”. The company's seating business continues to break through and successfully develop new forces, joint ventures and luxury brand customers. Since 2021, it has announced 8 fixed chairs, with an estimated sales amount of 34-36.8 billion yuan throughout the life cycle. The launch of this fixed increase will lay the foundation for the company's production capacity improvement and scale growth, and help gain more customer targets in the future.
A new passenger car chair company has been established in Germany, which is expected to be designated by European OEMs. The company plans to establish a new joint venture with Grammer in Germany to expand the global seat business of European OEMs such as BMW, with an investment of 50 million euros. The company has previously been designated by the Audi brand, and its overall chair manufacturing strength has been recognized by luxury brands. With excellent cost control and efficient service advantages, and the support of Grammer's global brand endorsement and R&D capabilities, we believe that the current European chair production capacity layout is expected to help the company seek global seat projects from BMW and other European OEMs, achieve domestic autonomy — joint venture luxury — traditional fuel, and another major breakthrough for global customers.
The full chair business is about to expand in 24 years, and it is expected to become a million-scale autonomous passenger car seat leader in the medium to long term.
The company's multiple projects from a new force, Volkswagen, and Audi will enter the mass production cycle in 2024. Assuming an average ASP of 8,000-9,000 yuan, the 2024 mass production project will have a total annual sales volume of 300,000 vehicles, which is expected to contribute 24-2.7 billion yuan in revenue. Medium- and long-term companies are not only satisfied with the domestic market, but also seek global projects. They are expected to gradually expand more global customers and gradually become the car seat assembly supplier with the best product quality, the strongest R&D capacity, the widest customer base, and the largest industry scale. Assuming global sales of 80 million vehicles in 2030, the company's market share is 5%. Based on an average ASP of 6,000 yuan, the company's passenger car seat business is expected to reach 24 billion yuan.
Investment advice: We believe that the company will eventually make gains in the path of improving Grammer's operations, expanding the Chinese market, and strengthening large passenger car seat assemblies, and become a comprehensive manufacturer of private car interior parts in China. Based on 24Q1 downstream sales changes and Grammer's business conditions, we expect the company's net profit to be 200 million, 4.4 billion yuan, and 1.04 billion yuan (previous value: 10.7 billion yuan) in 2023-2025, with year-on-year growth rates of 114%, 115%, and 138%, corresponding to 71 times, 33 times, and 14 times PE.
Using segmented valuation: 1) The traditional business segment is expected to maintain a high growth rate of new products from Jifeng headquarters, and Grammer China is expected to maintain high performance growth, giving it a net profit of 840 million yuan 15 times PE in 25 years, corresponding to a target market value of 12.7 billion yuan; 2) Considering that since Jifeng entered the passenger car chair industry, it has continued to break through new customers. Although the current business is not yet profitable, it is still rapidly expanding global customers. The passenger car chair business is expected to generate 2.5 billion yuan, 6.6 billion yuan, 101 billion yuan in net profit in 2024-2026 -130 million, 200 million yuan, and 5.1 billion yuan. The growth rate is high. It was given 30 times PE over 25 years, corresponding to a target market value of 6 billion yuan. In total, the company was given a target market value of 18.6 billion yuan in 2025, corresponding to a target price of 16.0 yuan, and a target space of 29%, maintaining a “strong” rating.
Risk warning: macroeconomic fluctuations, rising raw material prices exceeding expectations, risk of exchange rate fluctuations, falling short of expectations of integration, falling short of expectations, passenger car seat development falling short of expectations, etc.