Incident: Zhongding Co., Ltd. issued an announcement on June 6, 2024. Anhui Zhongding Fluid System Co., Ltd. (hereinafter referred to as “Zhongding Fluid”), a subsidiary of Anhui Zhongding Seals Co., Ltd. (hereinafter referred to as the “Company”), recently received a notification from a customer that the company became a batch supplier of thermal management pipeline assembly products for new models of a flying car subsidiary under a leading new domestic car company. The life cycle of this project is 5 years, and the total life cycle amount is about 84.7658 million yuan.
This targeting will have a positive effect on the company's further expansion of the automotive thermal management pipeline assembly supporting business.
Over the years, the company has been promoting the development and production of thermal management piping products. Its subsidiary, German TristoneFlowTech Holding SAS, is also an excellent supplier of engine and new energy vehicle battery thermal management pipeline products. It has its own patented exclusive production technology, the creatube process, and the core technology for TPV hoses and nylon tubes. The company's subsidiaries Zhongding Fluid and Anhui Zhongding Intelligent Thermal Systems Co., Ltd. lead the development of the thermal management system assembly business, actively develop and produce thermal management system assemblies and core component products, and have independent intellectual property rights.
Optimistic about the long-term growth potential of the air suspension business: As of January 2024, AMK China, or Anhui Amico, has received orders from many new domestic car builders and leading traditional independent brands, and Anhui Amico has received orders with a total output value of about 10.4 billion yuan. As of early May, the company's domestic air suspension business had received a total order output value of about 12.1 billion yuan, of which the total order output value for assembly products was about 1.7 billion yuan. We believe that the increasing total output value of orders received will enhance the company's long-term competitiveness.
Profit forecast and investment advice: We expect Zhongding Co., Ltd. to achieve revenue of 199/231/265 billion yuan in 2024/25/26, net profit to mother of 14.50/17.35/2,037 billion yuan, corresponding EPS of 1.10/1.32/1.55 yuan. Referring to comparable companies, we believe that the reasonable PE of Zhongding Co., Ltd. in 2024 is 13 to 15 times, with a reasonable value range of 14.32 to 16.53 yuan.
Risk warning: Global passenger car sales have fallen short of expectations, and raw material prices have risen sharply.