Recommended logic: 1) the company is a leading manufacturer of engine sealing products and sealing materials in China, which is widely used in automotive, construction machinery and other fields. In 2019, the company's automotive diesel engine cylinder head gasket products accounted for about 42% of the national market. 2) the company has competitive advantages in technology, service and customers: technologically, it has a leading synchronous R & D capability to accelerate the transformation and upgrading to the field of new energy vehicles; in service, it can quickly respond to changes in customer demand and quickly complete the market layout of the sixth standard gasket products; the customer base covers more than 80% of the domestic diesel engine main engine factories. 3) with the landing of the fund-raising project, the company's production and marketing scale has further expanded and the proportion of new products has gradually increased, thus thickening the performance.
The entry threshold for the engine sealing products industry is high, and the sixth national standard has further raised the requirements. Engine sealing products and sealing materials industry has a high threshold for entry, including supplier system certification barriers, technical barriers, customer resource barriers, capital barriers and scale effect barriers. With the deepening of energy saving and emission reduction, the engine is developing in the direction of high combustion efficiency and lightweight, which not only improves the engine performance, but also brings new opportunities to the engine sealing products enterprises with the strength of synchronous development.
Technology + service + customer, three aspects to create competitive advantage. 1) Technology: it has the leading synchronous R & D capability to accelerate the transformation and upgrading to the field of new energy vehicles. On the basis of introducing the technology of Japanese Ishikawa metal sealing gasket, the company has gradually formed its own core technology according to the actual situation of the domestic engine industry, and has the leading synchronous R & D capability in the same industry. In addition, with the help of the existing sealing product research and development technology and experience, the company strengthens the research and development of new energy products, and is carrying out the research and development of new energy vehicle electric drive system sealing products and other related products. 2) Service: product demand responds quickly. Based on strong technology and synchronous R & D capabilities, the company can quickly respond to changes in customer needs, effectively help the company's new technology application and product upgrading, and quickly complete the market layout of the sixth standard sealing gasket products. 3) customers: cover more than 80% of the domestic diesel engine factories. The concentration of diesel engine manufacturers in China is high. In terms of sales volume, the market share of the top 10 diesel engine mainframe factories in China reached 76% in 2019. The main customers downstream of the company include Weichai Holdings, FAW, Sinotruk, SAIC and other major engine manufacturers' mainstream brands. In addition, the company obtained Cummins global supplier qualification in 2019.
Profit forecast and investment advice: we expect the company's homed net profit from 2021 to 2023 to be 145 million yuan, 190 million yuan and 252 million yuan respectively, with year-on-year growth rates of 43.80%, 30.88% and 32.40%, respectively, and the corresponding EPS are 0.99,1.30,1.72 yuan respectively. Before the corresponding share price PE was 31,24 and 18 times, respectively.
Considering that the company is the leader in the field of diesel engine sealing products and is in the stage of rapid growth, it enjoys a valuation premium, giving the company a monthly target price of RMB 39 for the 2022 30X target PE,6, covering it for the first time and giving it a "buy" rating.
Risk hints: the company's production capacity is less than expected, raw material prices fluctuate sharply, market competition intensifies, the risk of annual decline policy changes for major customers, and so on.