\u3000\u3000 Wuxi Longsheng Technology Co.Ltd(300680) (300680)
Event:
The company released the performance forecast and realized the net profit attributable to the parent company of RMB 95-110 million in 2021, with a year-on-year increase of 77% - 105%; The net profit deducted from non parent company was 87-102 million yuan, with a year-on-year increase of 74% - 105%. Among them, 2021q4 company realized a net profit attributable to the parent company of 24-39 million yuan, with a year-on-year increase of 1% - 64%; The net profit deducted from non parent company was 19-34 million yuan, with a year-on-year increase of 27% - 126%.
Comments:
The motor core and EGR business made great efforts, and the annual performance in 2021 increased by 77% - 105% year-on-year
In 2021, the company's performance continued the trend of high growth. The annual net profit attributable to the parent increased by 77% - 105% year-on-year, and the net profit not attributable to the parent increased by 74% - 105% year-on-year. Among them, Q4 performance continued to shine. In 2021q4, the net profit attributable to the parent company increased by 1% - 64% year-on-year, and the net profit not attributable to the parent company increased by 27% - 126% year-on-year. The main reasons include: ① the new energy vehicle industry is booming, with annual production and sales of + 159% and + 157% respectively year-on-year in 2021, driving the vigorous sales of the company's drive motor iron core and other products; ② Benefiting from the upgrading of national VI emission standards for commercial vehicles and the promotion of hybrid technology routes for passenger vehicles, the company's EGR system business has increased rapidly.
The industry is booming and the production capacity continues to increase, and the growth momentum of motor core business is strong
The market demand for motor iron core continues to be strong. We expect that with the technological progress of new energy vehicles, the gradual improvement of charging infrastructure and the support of relevant industrial policies, the market scale of motor iron core in China will reach 3.9-4.5 billion and the global market scale is expected to reach 9.1-10.5 billion in 2025. In line with the industry trend, the company increases the capacity construction. The company expects that the first phase of new energy vehicle drive motor iron core project (1.2 million sets) will be put into operation in 2021. At the same time, it will release the fixed increase plan again in November 2021. It is proposed to raise no more than 716 million yuan (including) for the construction of 10 new motor iron core production lines (536 million yuan) and supplement working capital (180 million yuan). The company expects the capacity utilization rate of motor core business to reach more than 90% by the end of 2021. We believe that with the company's capacity investment and overweight capacity construction, the growth momentum of motor core business is strong.
The switching of national six standards drives the growth of EGR demand, and waits for the resumption of chip supply to accelerate EGR volume
Benefiting from the national VI exhaust emission policy and returning to the mainstream technical route of heavy-duty diesel vehicles, we estimate that the EGR market will expand to 3.7 billion, which is more than 9 times the market space before the implementation of national VI. However, affected by the global chip supply, the ECU in the automotive industry is in short supply and can not fully meet the market demand, resulting in some diesel engine manufacturers' National VI products still not fully loaded. As a leader in the EGR industry, we expect that with the gradual easing of the shortage of automotive chips, the company's national six EGR system product volume is expected to further accelerate.
Investment suggestion: due to the impact of chip supply, the rhythm of EGR volume slows down and the profit forecast is lowered. It is estimated that the net profit attributable to the parent company from 2021 to 2022 will be 107, 212 and 318 million (the original value is 119, 245 and 374 million), and the corresponding PE will be 48, 24 and 16 times, maintaining the "buy" rating.
Risk tip: the policy implementation is lower than expected, the automobile sales volume is declining, the domestic substitution is slow, the industry competition is intensified, the expansion of new products is slow, and the performance forecast is the preliminary calculation result. Please refer to the annual report.
