This report is read as follows:
The penetration of AMT heavy trucks has entered a stage of rapid improvement, and the company is expected to continue to improve in the heavy truck field by adopting the leading technology of Efu Futian.
Main points of investment:
Maintain the target price to $3.6 and maintain the "overweight" rating. Maintain the EPS of 0.16, 0.24 and 0.22 yuan in 2020-2022, refer to the valuation of comparable companies (the average PE in 2021 is 12.4), consider the leading industry of the company's AMT automatic transmission layout, and give the company a valuation premium of 15 times PE in 2021, corresponding to the target price of 3.60 yuan.
The significant improvement in the company's performance is due to the increased contribution of the joint ventures Fukuda Cummins and Fukuda Daimler. In 2020Q2, the company's return net profit is 480 million yuan, + 181% compared with the same period last year, deducting the non-return net profit is 270 million yuan (2019 Q2 is-170 million yuan), and the investment income of joint ventures and joint ventures is 260 million yuan (2019 Q2 is-30 million yuan), in line with expectations.
The company's good performance in the field of heavy trucks is due to the adoption of mature AMT automatic transmission technology by its joint venture company. January-September 2020Fukuda MotorHeavy truck sales (including Fudai) were 119000, with a market share of 9.6 per cent (7.3 per cent in 2019), a significant increase, with Foton Daimler Orman automatic heavy truck sales reaching 12549, up 638 per cent from a year earlier and exceeding 2019 sales (6000 for Auman EST-A, EST and GTL).
Driven by the demand side (younger drivers) and the supply side (new product launch), China's AMT heavy truck penetration is expected to exceed 20% in 2025. Compared with manual transmission heavy trucks, AMT heavy trucks save an average of 5% of fuel (2L to 3L per 100 km, corresponding to economic benefits of 15000 yuan to 20,000 yuan a year). The younger drivers on the demand side further improve the economy of AMT gearboxes in practical application, and new products on the supply side further reduce the cost of AMT gearboxes.
Risk hint: the impairment of accounts receivable exceeds expectations, and the launch of Fudai's new products does not meet expectations.