\u3000\u3000 Anhui Zhongding Sealing Parts Co.Ltd(000887) (000887)
Event overview: on February 25, 2022, the company announced that AMK holding GmbH & Co.KG, a Chinese subsidiary of AMK holding GmbH & Co.KG, has recently received a customer notice that the company has become a batch supplier of air supply unit assembly products of air suspension system for a new platform project of an independent brand head enterprise in China. The life cycle of the project is 5 years, and the total amount of the life cycle is about 340 million yuan.
The air suspension has been designated by independent head enterprises again, and the total amount of fixed points obtained by air suspension has reached 2.189 billion yuan. The localization of air suspension accelerates the cost reduction, the price of supporting models is expected to sink rapidly to the range of 20-30w, the penetration rate accelerates the popularization, and the market space continues to improve. The company took the lead in air suspension business and acquired AMK in 2016. AMK is a global high-end supplier of automotive air suspension systems, mainly supporting high-end customers such as Jaguar Land Rover, Volvo and Mercedes Benz. 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 layout the air suspension Chinese market. Based on AMK, the company takes the lead in localizing the air suspension products, mastering the core technology and seizing the market opportunity. In the future, it is expected to continue to lead the opponent by virtue of the first mover advantage, seize the air suspension blue ocean market strongly, and is expected to fully realize the localization. This time, it was once again designated as the new platform project of an independent head enterprise in China, the airborne products continued to be recognized, and the localization continued to make breakthroughs. Up to now, the total amount of orders for domestic projects has reached 2.189 billion yuan, and the business development is smooth.
With the air suspension as the core, accelerate the layout of the intelligent chassis strategy and comprehensively meet the transformation of Electric Intelligence in the industry. Now, the total amount of fixed-point projects has exceeded 10 billion.
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. With the air suspension as the core, the company accelerates the layout of the intelligent chassis strategy, grasps the core technology through high-quality mergers and acquisitions, 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 a global leader in automotive electronic parts. Up to now, the intelligent chassis announced by the company has received a total of 11.805 billion yuan of fixed-point projects in China, including 5.343 billion yuan of thermal management and 4.273 billion yuan of lightweight. The increase in volume and price of incremental business is expected to significantly open up the growth space of the company and drive the “double click” of 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 cyclical recovery of the company’s performance and the continuous promotion of the smart chassis strategy, as a global leading company of parts and components, it is expected to enjoy a valuation premium and maintain the “recommended” rating.
Risk tip: the price fluctuation of raw materials leads to low gross profit margin, less than expected expansion of new products, exchange rate risk, etc.
