In terms of 2011 volume, Xinchen Power is one of the leading auto engine manufacturers in the independent brand market of passenger and modern commercial engine engines in China. According to the Frost & Sullivan report, the company is the largest independent brand engine manufacturer in China's small passenger engine market in 2011, accounting for 9.4% of the independent brand division in China's passenger and commercial engine market, and its own brand accounts for about 13.8% in China's passenger and commercial engine market. The company's target market is China's passenger car and model commercial engine market, which has developed rapidly in recent years. According to the Frost & Sullivan report, the total number of passenger and modern commercial locomotives in China has increased from 7.9 million in 2007 to 1710 million in 2011.
We suggest that investors should make a small note on the stock market.
The company is in charge of
1) in China's rapidly growing market for self-branded passenger and modern commercial engine engines, the company is one of the leading manufacturers of automobile engines; (2) the company provides various types of engines for many types of cars; (3) the company has strong R & D strength; and (4) the company has long-term customer relations.
Overview of the industry
According to the Frost & Sullivan report, auto production in North America, Oceania and Japan withered between 2008 and 2009 and then recovered slightly in 2010. The world economic downturn has led to a low global automobile output (except China). China has become the only major passenger production country. In 2009, the output of passenger products increased, and continued to grow and surpassed North America, Asia and Japan. In 2010, China overtook Asia to become the world's largest passenger and commercial market. From 2007 to 2011, the annual unit turnover of passenger and commercial passenger cars in China increased by about 9300 million units (an increase of 117.7%).
According to the Frost & Sullivan report, although the number of passenger goods and models of commercial goods sold in China has increased since 2008, the per capita ownership rate of China's passenger goods and models still lags behind North America, Asia and Japan. In 2011, the per capita consumption of passenger and commercial commodities in China was 10.1 times, 7.1 times and 5.1 times lower than that in North America, Asia and Japan, respectively, indicating that China's passenger and commercial markets still have the power to grow in the future.
According to the Frost & Sullivan report, among the different types of passenger engines used in China, the growth rate of the off-road engine market is the strongest from 2007 to 2011, and the maximum growth rate will continue until 2016. The growth from 2010 to 2011 is mainly due to the fact that the Chinese government implemented a 400 billion yuan investment plan to stimulate China's economic growth in 2008 and a series of economic policies to stimulate the decline of the economy, resulting in a decline in 2009 and 2010.
Profit ability and duty number
The company's income for the nine months ended September 30, 2012 was 19.463 million yuan, and the people's income for the same period in 2011 increased by 4.463 million yuan, an increase of 29.8 percent. The overall increase was mainly due to the increase in product demand due to the growth of China's automobile industry, especially the increase in sales of gasoline engines below 1.6 liters due to the increase in existing customer demand and new customer demand. The gross profit increased by 26.7% from the gross profit of 39.0 million yuan for the nine months ended September 30, 2012 to 3.028 million yuan for the same period in 2011. The company's profit for the nine months ended September 30, 2012 was 2.238 million yuan, while that of 1.646 million yuan for the same period in 2011 increased by 5.92 million yuan, an increase of 36.0%.
Collection purpose
HK $730 million (calculated at HK $2.50 per share) from this collection will be used for the following purposes: about 65% for the production capacity of large companies, about 24% for new product development activities, and about 11% for the construction of an R & D center in Chengdu.
Valuation
The company's 2012 forecast earnings is 360 million Hong Kong dollars, while the company's forecast price-to-earnings ratio of 7.7 to 9.8 times, price-to-price ratio of 1.3 to 1.5 times, compared with the current Hong Kong-listed peers, the average forward price-to-earnings ratio is 13.8 times, the average price-to-earnings ratio is 1.5 times. The company is determined to be attractive. Coupled with the fact that the company's size is small, the space for growth will be greater. In the future, China's automobile growth will continue to grow by several digits, which is positive for the demand for motor engines, so we suggest that investors should make a small note on the stock market.
Negative factor
1) most of the company's income comes from customers who do not have a long-term contract with the company; (2) the qualification of the company's raw materials and engine parts may increase; (3) the lower price of the product may have an adverse effect on the company's profitability; (4) during the operating record period, the company should receive a substantial increase in exchange items and tickets from related companies and non-related companies. (5) the outflow of allowance funds recorded by the company in 2010 was mainly due to an increase in the amount due to the company. The company is unable to guarantee any deposit inflows that can be recorded in the future.