Wuxi Best Precision Machinery Co.Ltd(300580) (300580)
Leading supplier of core parts of turbocharger, promising to enter the new energy track
The company has been deeply engaged in the field of turbocharging. In recent years, it has cut into the track of new energy vehicles through extensive M & A, opening the second growth curve of the company. With the increasing penetration of the turbocharger industry and the gradual implementation of the production capacity of functional parts of new energy vehicles, the company’s revenue is expected to usher in rapid growth. We estimate that the company’s revenue from 2021 to 2023 will be RMB 1086, 1315 and 1636 million, the net profit attributable to the parent company will be RMB 215, 288 and 387 million, and the EPS will be RMB 107, 1.44 and 1.93/share, corresponding to 23.3, 17.4 and 13.0 times of the current share price PE. For the first time, give the company a “buy” rating.
Deep ploughing in the field of turbocharging parts, the performance maintained stable growth
The company is deeply engaged in the processing of turbocharger parts, and its main products include impellers, intermediate shells, precision bearing parts, compressor casings, etc. Automobile turbocharger parts have high requirements for processing materials, processing accuracy and stable quality. Only a few enterprises with advantages in equipment, process and production organization can produce them. Relying on many years of design experience in the field of tooling and fixture, the company’s tooling and fixture business and precision processing business complement each other and form a cooperative development relationship, Foundry company’s unique competitive advantage. The company introduces the world’s leading processing and testing equipment and carries out automatic upgrading and transformation of the production line. The product accuracy and production capacity are at the leading level outside China. Its customers cover the top five manufacturers in the global turbocharger market.
Extensive mergers and acquisitions were carried out in an orderly manner, and new energy business opened up room for growth
With the improvement of electrification rate in China’s automobile market, the company actively explores the layout of new energy vehicle related businesses and enters the field of hydrogen fuel cell and lightweight structural parts of new energy vehicles. The company independently developed key parts of fuel cell vehicles, which were successfully delivered to customer Garrett in 2018 and applied to the production and manufacturing of honda clarity new energy vehicles in Japan. After that, it successively entered Bosch China and hydewell hydrogen fuel cell parts supply system. In 2020, the company acquired Suzhou Hebes, a company specializing in zinc, aluminum, magnesium, copper and other hardware, cut into Tesla‘s supply system, and distributed new energy vehicle lightweight products through its holding subsidiary Yitong Lightweight Technology Co., Ltd.
Risk tip: the prosperity of the automobile industry is lower than expected; Turbocharger permeability is lower than expected; The capacity construction of functional parts of new energy vehicles has not progressed as expected.
