\u3000\u3000 Anhui Zhongding Sealing Parts Co.Ltd(000887) (000887)
Event overview: on January 28, 2022, the company released the performance forecast for 2021. During the reporting period, it is expected to realize the net profit attributable to the shareholders of the listed company in 2021 of 940-1070 million yuan, with a year-on-year increase of 90.84% – 117.23%; The net profit attributable to shareholders of listed companies after deducting non recurring profits and losses was 640-860 million yuan, with a year-on-year increase of 117.18% – 191.84%.
The performance is in line with market expectations, the operation is stable, the inflection point is fulfilled, and the annual profit is close to the historical high
In 2021, the company expects to realize a net profit attributable to the parent company of 940 million yuan – 1.070 billion yuan, with a year-on-year increase of 90.84% – 117.23%. Among them, 2021q4 is expected to realize the net profit attributable to the parent company of 122 million yuan – 252 million yuan, and the performance is in line with expectations. In 2017, the company’s net profit attributable to the parent company was 1.127 billion, a record high. In 2020, the company’s net profit attributable to the parent company was 493 million. After the cycle bottomed out, the company’s performance achieved a V-shaped reversal in 2021 and was close to an all-time high. The company’s basic business (automotive rubber) is a global leader, with cost of ownership and R & D advantages, providing the company with stable cash flow and realizing transformation and upgrading. The cycle stabilization of overseas companies and the improvement of management quickly promote the return of performance cycle.
The orders of suspended products continued to land, and the stripping of goodwill promoted the continuous improvement of profitability and opened up room for growth
AMK is a global high-end supplier of automotive air suspension systems, mainly supporting Jaguar Land Rover, Volvo, Mercedes Benz and other high-end customers. In July 2018, AMK China subsidiary Anhui anmeike was established, set up a technology center in Shanghai, and built a production base in Anhui to promote the localization of air suspension products and open the Chinese market. At the beginning of 2021, after AMK stripped off its traditional industrial business, its profit gradually went on the right track. In the first half of 2021, the suspended gross profit margin was 31.5%, with a year-on-year increase of 18.5pct, and its profitability increased significantly. Breakthroughs have been made in the localization of air suspension business. Up to now, the total amount of orders for domestic projects has reached 1.749 billion yuan. With the continuous promotion of product localization, the company is expected to open up growth space with new business.
Layout the intelligent chassis strategy with the air suspension as the core, and comprehensively meet the transformation of Electric Intelligence in the industry
The value of the company’s traditional automobile damping and sealing rubber business is only a few hundred yuan. The value of the intelligent chassis business hollow suspension (intellectualization), chassis lightweight assembly (lightweight) and thermal management pipeline assembly (electrification) is tens of thousands of yuan. The value of the intelligent chassis business has increased significantly. At present, the company’s traditional business revenue has ranked among the top 100 parts in the world. Large scale brings cost advantages, high-quality customer structure, as well as the in-depth absorption and localization of overseas advanced technology, providing the company with stable cash flow. The intelligent chassis business grasps the core technology through high-quality M & A, realizes localization through reverse investment, and has the first mover advantage. It is expected to quickly seize the market in the transition period of electric, intelligent and lightweight industry, and become the global leader in automotive electronic parts. Up to now, the intelligent chassis announced by the company has received a total of 10.186 billion yuan of fixed-point projects in China, including 5.343 billion yuan of thermal management and 3.094 billion yuan of lightweight. Incremental business is expected to significantly open the company’s growth space and drive the company’s performance and valuation.
Investment suggestion: it is estimated that the company will achieve revenue of RMB 13.028/13.715/14.929 billion and net profit attributable to the parent company of RMB 1.050/11.50/1.388 billion from 2021 to 2023. The current market value corresponds to 23 / 21 / 17 times of PE from 2021 to 2023. With the performance returning to the steady-state level and the continuous promotion of the company’s electric intelligent business, as a global leading company of parts and components, it is expected to enjoy a valuation premium and maintain the “recommended” rating.
Risk tips: raw material price fluctuations lead to low gross profit margin expectations, new product expansion is less than expected, exchange rate risk, etc.
