Anhui Zhongding Sealing Parts Co.Ltd(000887) (000887)
China’s auto parts enterprises with a scale of 10 billion yuan performed well in the first three quarters of 2021. The company, formerly known as Anhui Ningguo seal factory established in 1980, is mainly engaged in the R & D, production and sales of automobile seals and non wheel rubber products. After the listing of backdoor Feicai shares in early 2007, the company carried out many overseas mergers and acquisitions from 2008 to 2017, and the scale of revenue increased rapidly. Then entered the platform integration period, the revenue growth slowed down significantly, and the scale remained above 10 billion yuan. At present, the company’s main business covers non wheel rubber, sealing system, cooling pipeline, lightweight chassis and air suspension. The company performed well in the first three quarters of 2021, realizing an operating revenue of 9.34 billion yuan, a year-on-year increase of 19.72%; The net profit attributable to the parent company was 818 million yuan, a year-on-year increase of 171.17%. The profit growth of the company in the first three quarters was much higher than that of revenue. On the one hand, the profit in the same period last year was affected by the epidemic, on the other hand, the income formed by the sale of greenmition equity by European Zhongding was confirmed in the second quarter of this year. In the third quarter, the company realized an operating revenue of 2.957 billion yuan, a year-on-year decrease of 3.21% and a month on month decrease of 7.22%; The net profit attributable to the parent company was 227 million yuan, a year-on-year increase of 26.11% and a month on month decrease of 35.88%. In the third quarter, due to the lack of core and the sharp rise of raw materials in the industry, the net profit attributable to the parent company still increased rapidly year-on-year, reflecting strong business toughness.
The main business performed well. In terms of products, the sealing system business grew steadily. In the first half of 2021, the operating revenue was RMB 1.443 billion, a year-on-year increase of 18.58%, and the gross profit margin increased by 7.47 PCT year-on-year; The non wheel rubber business performed better than its counterparts in China and achieved an operating revenue of 1.497 billion yuan, with a year-on-year increase of 65.02% and a year-on-year decrease in gross profit margin of 1.45 PCT; The cooling system business realized an operating revenue of 1.739 billion yuan, a year-on-year increase of 57.07%, and the gross profit margin increased by 2.92 PCT year-on-year; The lightweight business achieved an operating revenue of 367 million yuan, a year-on-year increase of 119.17%, and the gross profit margin increased by 0.63 PCT year-on-year; The air suspension system business achieved an operating revenue of 296 million yuan, a year-on-year decrease of 10.90%, and the gross profit margin increased by 18.55 PCT year-on-year. We judge that the decline in revenue is mainly caused by the stripping of AMK industrial business; Other businesses realized an operating revenue of 755 million yuan, a year-on-year increase of 11.37%, and the gross profit margin increased by 13.84pct.
The penetration of air suspension of domestic medium and high-end new energy vehicles is accelerated, and the air suspension business is expected to become the support point for the company’s future performance growth. In the past, air suspension was mainly equipped with more than 700000 high-end models. With the rise of domestic medium and high-end new energy vehicle brands, 300000-350000 new energy vehicles also began to be equipped with air suspension. We believe that under the demonstration effect of new energy brands such as Weilai and jikrypton, other domestic brands will follow up one after another, and the air suspension system is expected to sink to models in the range of 250000-300000. The air suspension system is mainly composed of air supply unit, air spring and electromagnetic shock absorber. At present, the single vehicle value of hardware assembly is about 8000 yuan. If measured based on 25 million passenger cars in 2025, it is assumed that the proportion of more than 250000 models in the overall market remains about 20%, and the penetration rate of air suspension reaches 50%, We estimate that the overall passenger car market space will be about 20 billion yuan in 2025. The company’s air suspension business has a leading advantage in China. Its German AMK company is the core supplier of air supply units. It is equipped in new power vehicle enterprises such as Weilai and lantu. At present, the market share in China is up to 60%. At the same time, the company is committed to becoming a supplier of air suspension hardware assembly. It is entering the field of air spring through the dual mode of self research and cooperation. It is expected to continue to maintain its competitive advantage in the process of high-speed penetration of air suspension industry in the future.
The single vehicle value of the cooling pipeline of new energy vehicles is about three times higher than that of traditional fuel vehicles, and the company is expected to fully benefit. In the past, the cooling pipeline of traditional fuel vehicles was mainly concentrated in the front end of the engine, and the value of a single vehicle was about 300 yuan, New energy vehicles have more battery systems (the generator system is added to the plug-in mixing and range increase). The single vehicle value of the pure electric vehicle cooling pipeline is 700-800 yuan, the plug-in mixing is about 1200 yuan, and the range increase is 1500-1600 yuan. The overall single vehicle value of the new energy vehicle cooling pipeline has increased by about 3 times. The main engine plant business of the company’s cooling pipeline is dominated by TFH in Germany, and the non main engine plant business is dominated by Zhongding fluid. At present, the main engine plant business of the company is outside China Revenue accounts for half. In terms of Chinese customers, the company covers almost all leading new forces and independent new energy brands, and is expected to fully benefit from the rapid penetration of new energy vehicles. At present, most automotive liquid cooling pipelines are mainly rubber pipes, and TVP hoses and nylon pipes with heavier rubber pipes and better performance have the trend to replace rubber pipes. The company’s subsidiary, Germany TFH, has its own patented core technology of TPV hose and nylon pipe. It ranks the top two in the industry in its subdivided field in the world. At the same time, it is also the only TPV hose company in China. It is expected to continue to maintain its leading position in the industry in the future.
Give the company a “recommended” rating. It is estimated that from 2021 to 2023, the company’s operating revenue will be RMB 12.897 billion, RMB 14.574 billion and RMB 16.283 billion respectively, the net profit attributable to the parent company will be RMB 1.077 billion, RMB 1.254 billion and RMB 1.431 billion respectively, the corresponding EPS will be RMB 0.88, RMB 103 and RMB 1.17 respectively, and the corresponding PE multiples of the current stock price will be 23.93 times, 20.55 times and 18.01 times. Considering that the company’s business has sufficient cooling management orders, and the air suspension business is expected to gradually increase in volume. With reference to the valuation level of comparable companies, the company is given a PE valuation of 25-30 times in 2022, and the corresponding reasonable range of valuation is 25.75-30.90 yuan, giving the company a “recommended” rating.
Risk tip: the automobile boom is less than expected, the expansion of new customers is less than expected, the progress of new business is less than expected, and the price fluctuation risk of raw materials.
