Anhui Zhongding Sealing Parts Co.Ltd(000887) (000887)
1、 Event overview
On December 11, 2021, the company announced that Anhui Zhongding holding (Group) Co., Ltd., the controlling shareholder of Anhui Zhongding Sealing Parts Co.Ltd(000887) , intends to acquire 100% of the equity of the shock absorption business company of Bridgestone Co., Ltd. (the “new company” to be established by integrating its shock absorption rubber business, hereinafter referred to as the “new company”) with its own funds.
2、 Analysis and judgment
After overseas M & A, the customer structure and target market are further expanded to Japan, which has no impact on the performance of Listed Companies in the short term, the comprehensive competitiveness of NVH in the medium and long term continues to strengthen, and the performance of listed companies is expected to thicken
Improve the global business layout, have no significant impact on the performance of Listed Companies in the short term, further strengthen the comprehensive competitiveness of NVH in the medium and long term, and the performance of listed companies is expected to increase. At present, the main customer groups of Zhongding damping company under the company are Chinese, European and American customers, and the main business of the new company is Japanese customers. This acquisition further improves the global layout of the company, and the global competitiveness and market share of NVH business are expected to continue to improve. Due to the current performance of the new company and the uncertainty in the performance integration period, the controlling shareholder Zhongding group plans to invest in the acquisition with its own funds. After the business of the new company can be profitable, Zhongding group promises to give priority to the transfer of 100% equity of the new company to the listed company. The acquisition has no significant impact on the performance of Listed Companies in the short term, and is expected to thicken in the medium and long term.
With many years of experience in overseas M & A and integration, the new energy vehicle business and air spring business of the new company are expected to accelerate the intelligent chassis strategy of listed companies
The company has rich experience in global M & A integration and Chinese landing. In addition to further strengthening the global comprehensive competitiveness of the company’s traditional business, the new energy and air spring business of the new company is expected to accelerate the company’s core strategy of intelligent chassis. Based on the layout of electrification and intelligence, the company acquired the intelligent chassis strategy supported by TFH and AMK, fluid and air suspension business before and after, which is an “important incremental track business” for the company to meet the industrial change layout. The new energy and air spring business of the new company is expected to accelerate this strategy. In the future, the company is expected to continue to “complete and strengthen” the upstream and downstream of the industrial chain related to the core strategy, quickly respond to the market demand, give play to the first mover advantage and continue to build the business barrier of intelligent chassis.
3、 Investment advice
It is estimated that the company will achieve a revenue of RMB 13.028/13.715/14.929 billion and a 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 25 / 22 / 19 times of PE from 2021 to 2023. The company’s valuation is significantly lower than 32 times the average valuation level of Shenwan parts sector in 2021 (wind unanimously predicted). With the cyclical recovery of the company’s performance and the continuous promotion of intelligent chassis strategy, as a global leading company of parts and components, it is expected to enjoy a valuation premium and maintain the “recommendation” rating.
4、 Risk tip: raw material price fluctuation leads to low gross profit margin, new product expansion is less than expected, exchange rate risk, etc.
