Investment summary

Ploughing automobile chassis parts and turning to the market leader of shock absorption segment

Founded in June 2002, the company has formed the business layout of steering damping parts, automotive air-conditioning compressors, high-precision parts, lightweight aluminum alloy and so on. Among them, steering damping parts, high-precision parts, aluminum alloy lightweight products belong to the automotive industry secondary suppliers, automotive air compressor part of the business is a first-class supplier. The downstream customers of the company's traditional steering parts (rack, gear, worm) and damping parts (piston rod) cover first-line steering and shock absorber enterprises such as Bosch, Wandu, Huizhong Saks and so on. The barriers of automobile steering and damping parts industry are higher, the relationship between the whole vehicle factory and parts manufacturers is stable, the stickiness is strong, and the requirements of quality certification and process audit are higher, so the overall competition pattern is relatively stable. The company is a leading enterprise in the market segmentation of rack and damping piston rod, and has maintained its leading position for many years in a row. In 2020, the company turned to rack market share of 47.57%, a year-on-year increase of 4.6 percentage points, damping piston rod market share of 38.87%, an increase of 4.5 percentage points over the same period last year.

With the acquisition of Guangyu into the automotive air compressor business, the application scale of commercial vehicles continues to improve. In 2018, the company acquired shares in Guangyu to enter the field of automotive air-conditioning compressors. The company has mature automotive compressor research and development, manufacturing experience and mature supply chain resources, currently mainly used in commercial vehicles (heavy trucks, light trucks, engineering vehicles, buses, etc.), leading in the commercial vehicle market share. In 2016, benefiting from the overall growth of the commercial vehicle market and the large-scale application of automotive air-conditioning compressor products in the sixth national model, the company sold 1.4543 million commercial vehicle air-conditioning compressor products. the market share has increased to 28% (10%, 14%, 19% and 23% respectively from 2020 to 2019). It is the leading enterprise of commercial vehicle air compressor products. Customers include BAIC Foton, SAIC GM Wuling, Sinotruk, Changan Group and so on.

Actively develop the new energy vehicle business, lay out new growth poles, and significantly improve the matching value of bicycles with the rapid growth of production and sales of new energy vehicles, the company accelerates product iteration, pays attention to product deep processing and the adjustment of product structure, and the scale applied to mainstream new energy models has increased significantly. In 2020, the company shipped 692700 steering products used in new energy vehicles, an increase of 15.37 percent over the same period last year, and 940300 shock absorbing products used in new energy vehicles, a substantial increase over the same period last year. The first-class customers of the company mainly include Yubei Machinery, Beijing Wandu and so on, while the downstream mainstream car companies include BYD, Tesla, Inc., BAIC New Energy, SAIC, Volkswagen and so on. New energy vehicles put forward higher requirements for steering shock absorbers and other parts, and the value of the matching is also significantly increased.

It is estimated that the unit price of steering products applied by the company to new energy vehicles in 2020 is 28.67 yuan, much higher than 10.12 yuan for traditional fuel vehicles, and 15.95 yuan for shock absorbers, which is higher than 10 yuan for traditional fuel vehicles. In addition, the company actively arranges the thermal management of new energy vehicles, and independently develops thermal management and air conditioning controllers. At present, the company has completed the research and development of heat pump system control of new energy vehicles, and docked and tested with mainstream car factories. The value of thermal management bicycle of pure electric passenger vehicle is nearly twice as high as that of traditional fuel vehicle, in which the air conditioning compressor needs to be replaced by electric scroll compressor, and the unit value is increased from 400,600yuan to 1500-1800 yuan. The company is expected to benefit from the double dividend of the continuous growth of the penetration rate of new energy vehicles and the increase in the value of cars.

The integration has achieved remarkable results, and the performance dilemma has been reversed.

The company's overall revenue level has increased steadily, with CAGR reaching 16.75% from 2011 to 2020.

2021Q1 realized revenue of 429 million yuan, an increase of 75.78 percent over the same period last year. After the performance of Guangyu fell short of the expected impairment of goodwill in 2019, the company rectified Shanghai Guangyu to eliminate the hidden lightning points and strengthen the operational efficiency of the company's overall management at the same time. In 2020, the company's performance reversed, and the net profit attributed to shareholders of listed companies reached 30.3197 million yuan. The performance of 21Q1 Company continued to improve, with a net profit of 22 million yuan, an increase of 34.1% over the same period last year and 12.3% month-on-month growth.

We estimate that the operating income of the company in 2021, 2022 and 2023 will be 1.968 billion yuan, 2.55 billion yuan and 3.099 billion yuan respectively, with a growth rate of 33.85%, 29.54% and 21.54% respectively. The net profit of shareholders belonging to the parent company is 79 million yuan, 127 million yuan and 169 million yuan respectively. The fully diluted EPS per share is 0.22,0.35 and 0.47 yuan respectively, corresponding to the PE level of 26.28,16.32 and 12.27 times. Coverage for the first time, giving the company a "cautious overweight" rating.

Main risk

The company turns to the risk that the sales of shock absorber parts and air compressors are lower than expected and the prices of raw materials continue to rise sharply.