Event: the company released its semi-annual report for 2020, with operating income of 1.309 billion yuan in the first half of the year, an increase of 3.27% over the same period last year, and net profit of 39 million yuan, down 9.06% from the same period last year.
Automobile steel wheel business closely follows the market to focus on domestic sales, deeply ploughing customers to link upstream and downstream to overcome difficulties. Affected by the overseas epidemic, the company's exports declined in the first half of the year. On the one hand, the company adjusts the layout in time, grasps the market opportunity of promoting new energy vehicles and eliminating three trucks in China, and rapidly expands the domestic OE market share by virtue of the lightweight steel wheel sales experience and complete industrial chain advantages accumulated in European and American markets. On the other hand, the company deeply cultivates the customer relationship, gives business support to customers for many years, and links the upstream and downstream industrial chains to overcome difficulties and maintain sustainable development. During the reporting period, the company's automobile steel wheel business achieved an operating income of 576.75 million yuan, an increase of 0.73% over the same period last year, of which the domestic OE market increased by 82.44%, making up for the decrease in exports caused by the epidemic.
The steel structure business continues to subdivide the field, and its advantages highlight the steady development and rise. In the first half of 2020, the company's steel structure business continued to cultivate large industrial plants and subdivisions such as municipal / bridge and rail transit, with good order growth and continued implementation and a series of new domestic projects. Although the company and its upstream and downstream industrial chains were delayed by the epidemic, thanks to the increase in investment in national infrastructure construction and remarkable achievements in epidemic prevention and control, the domestic steel structure business situation was relatively good, with an operating income of 619.2 million yuan in the first half of the year, an increase of 3.49% over the same period last year, accounting for 47.30% of the business income in the reporting period.
The forging aluminum wheel project continued to advance in an orderly manner, and the application for non-public offering of shares was approved. During the reporting period, the company's forged aluminum wheel customer development is good. In China, we have successively obtained orders from Xiamen Jinlong and other car factories; with the promotion of international certification of forged aluminum wheel products, we have also opened up certain target customers in the international market. In addition, the company is also speeding up the R & D and innovation of forged aluminum wheels and constantly optimizing the product structure to meet the diversified needs of customers. At the end of 2019, the company replanned the non-public offering of the lightweight forged aluminum alloy intelligent manufacturing project, which was examined and approved by the company's interim shareholders' meeting on March 9, 2020, and was accepted by the Securities Regulatory Commission in early May, and announced that the application was approved on August 25. This additional issue reflects the company's determination to compete with international giants and lead China's industrial reform in the field of intelligent forging aluminum alloy wheels as a leading enterprise in China. The company's forging aluminum wheel project is expected in the future.
Investment suggestion: with the overall steady improvement of domestic epidemic prevention and control and the warming of industry demand, the company, as the leading automobile steel wheel manufacturer in China, is expected to continue to grow in the future. We estimate that the company's 20-year / 21-year revenue will be 2.543 billion yuan / 2.752 billion yuan respectively, and the return net profit will be 86 million yuan / 101 million yuan respectively, corresponding to 24 times PE for 21 years, maintaining the "buy" rating.
Risk hint: automobile industry sales are lower than expected, steel structure demand is lower than expected, risk hint: automobile industry sales are lower than expected, steel structure demand is lower than expected
