One stop shop integrated business model favours higher than peers GM ;
We recently held an update call with Xin Point management to discuss their latest development. Xin Point offers one-stop production platform to clients, which begins from components and mold designs, injection molding, plating/painting to interior assembly. This vertically integrated business models facilitate Xin Point to enjoy a higher production yields~89% on average during track record period in FY14-FY19 than other leading players, hence a higher GM during in FY16-FY18 ranged from 36.6%-41.1% than peers such as Minth 425.HK 32%-33.8% in FY16-FY18
In 1H20, due to COVID-19 outbreak which distorted production Xin Point s sales and EPS slipped 20.1%/21.7% to RMB817mn and RMB62.7mn respectively. Despite a low utilization rate at ~50%, GM still managed to grow 440 bps to 29.7%,thanks to better product mix which drove ASP to RMB5.87/pc vs. RMB~5.1/5.4/5.6 in FY17-FY19 With production fully resumed in 2H20 and hence improved utilization rate, we expect Xin Point's GM and net profit would improve HoH.
Current clients include renowned OEMs and Tier-1 supplier in US and Europe; Increasing orders from EV serve as another growth engine
China s increasing competitiveness in auto parts market, light vehicle trend and model upgrade cycle include better interior design from OEMs which require application of greater number of high-quality plastic electroplated parts and interior assembly. Xin Point s current clients include renowned OEMs and Tier-1 supplier in US and Europe, with top 5 clients accounted for ~60% of revenue.
Moreover, Xin Point has received ~RMB 590mn new orders for the upcoming five years from a globally renowned EV brand, which we believe to be Tesla as both parties have begun co-operation since 2017. We expect orders would continue to ramp up as Tesla Giga Shanghai has commenced full operation. In addition, Xin Point targets for more direct co-operation with other EV brands including the rising stars in China such as NIO.
We expect Xin Point's ASP would be able to achieve a low-mid single digit growth going forward on improved product mix. Given its leadership in the industry, and offers a one-stop shop platform to clients i.e. from components and mold designs, injection molding, plating/painting to interior assembly This vertically integrated business models facilitate Xin Point to enjoy a higher production yields~90% in 1H20 than other leading players.
Strong order book and new capacity ramp up sets up a good foundation for future growth
In 1H20, Xin Point's order book reached RMB9.4bn which has set up a good foundation for future growth in the coming 4-5 years. Upon Xin Point's Changzhou, Jiujiang and Mexico plant ramp up, which would increase Xin Point total designed capacity to 4.19mn sqm/year, this set up a good fundamental to fulfill clien's demand.
Catalysts
FY20E profit alert
Increasing order/ revenue contribution from EV brands
Increasing market awareness
Trading at FY21E 9.4x P/E, near term set back provides good entry point to ride on turnaround and increasing EV exposure story
We expect Xin Point's sales and EPS to grow 11.4%/38.9% CAGR in FY19-FY22E, driven by strong order backlog and gradual GM pickup, its FY21E 9.4x P/E~49% discount to HK, China and international peers is attractive and deserve a re-rating story. Together with its FY21E 4.5% dividend yield and strong financial position net cash ~RMB 510mn in 1H20, account for ~10% current market cap We deem Xin Point as a value play within the auto parts universe and any near-term share price set back would provide a good entry point to ride on turnaround and increasing EV exposure story. We value Xin Point at HK$6.60 based on 13.0x~1 sd. above Xin Point's average P/E since listing FY21E PE and EPS, as we notice there's an increasing risk appetite for mid-small caps YTD.
一站式綜合商業模式對通用汽車的青睞高於同行;
我們最近與信點管理層舉行了一次最新電話會議,討論他們的最新進展。信點為客户提供從元器件、模具設計、注塑、電鍍/塗裝到內飾組裝的一站式生產平臺。這種垂直整合的商業模式使Xin Point在2014-19財年的業績記錄期間享受到比其他領先企業更高的平均產量~89%,因此在16-18財年期間的GM比Minth 425.HK 32%-33.8%的同行在16-18財年高出36.6%-41.1%
20年第一季度,由於新冠肺炎的爆發扭曲了生產,信點的銷售額和每股收益分別下滑了20.1%和21.7%,分別為8.17億元和6270萬元。儘管利用率較低(約50%),但通用汽車仍設法實現了440個基點至29.7%的增長,這要歸功於更好的產品組合,推動ASP從17-19財年的每件5.87元人民幣至5.1元/5.4元/5.6元,並於20年下半年全面恢復生產,從而提高了利用率,我們預計信點的GM和淨利潤將改善HoH。
目前的客户包括美國和歐洲的知名原始設備製造商和一級供應商;來自電動汽車的不斷增加的訂單是另一個增長引擎
中國在汽車零部件市場日益增強的競爭力、輕型車趨勢和車型升級週期包括原始設備製造商(OEM)更好的內飾設計,這需要應用更多高質量的塑料電鍍部件和內飾總成。信點目前的客户包括美國和歐洲的知名OEM和一級供應商,前5名客户佔收入的60%左右。
此外,Xin Point還收到了來自一個全球知名電動汽車品牌的約5.9億元人民幣的未來五年新訂單,我們認為這個品牌就是特斯拉,因為雙方從2017年開始合作。我們預計,隨着特斯拉Giga Shanghai已經開始全面運營,訂單將繼續增加。此外,信點的目標是與其他電動汽車品牌進行更直接的合作,包括蔚來(Didi Chuxing)等中國的後起之秀。
我們預計Xin Point的ASP將能夠在改善產品組合的基礎上實現中低位數的個位數增長。憑藉其在行業中的領先地位,併為客户提供從零部件和模具設計、注塑、電鍍/塗裝到內飾組裝的一站式平臺,這種垂直整合的商業模式使信點在今年上半年獲得了比其他領先企業更高的產品良率~90%。
強勁的訂單和新的產能增長為未來的增長奠定了良好的基礎
2010年上半年,信點的訂單達到94億元人民幣,為未來4-5年的增長奠定了良好的基礎。新點在常州、九江和墨西哥的工廠擴建後,新點的總設計產能將提高到419萬平方米/年,這為滿足客户的需求奠定了良好的基礎。
催化劑
20E財年利潤預警
電動汽車品牌對訂單/收入的貢獻不斷增加
提高市場意識
FY21E 9.4倍市盈率的交易,近期受挫提供了很好的切入點,可以利用扭虧為盈和增加電動汽車敞口的故事
我們預計Xin Point在FY19-22E財年的銷售額和每股收益將增長11.4%/38.9%,在強勁的訂單積壓和通用汽車逐步回升的推動下,其FY21E 9.4x市盈率~49%的折扣相對於香港、中國內地和國際同行是有吸引力的,值得重新評級。加上其201E財年4.5%的股息率和強勁的財務狀況,上半年淨現金~人民幣5.1億元,佔當前市值的約10%我們認為Xin Point是汽車零部件領域的一種價值發揮,任何近期股價的回落都將為實現扭虧為盈和增加電動汽車敞口提供一個很好的切入點。基於13.0x~1 SD,我們對信點的估值為6.60港元。高於Xin Point自201E財年PE和EPS上市以來的平均市盈率,因為我們注意到,投資者對中小盤股YTD的風險偏好越來越高。