\u3000\u3 China Vanke Co.Ltd(000002) 050 Zhejiang Sanhua Intelligent Controls Co.Ltd(002050) )
Key investment points
The recall of key customers has nothing to do with the quality of the company’s products and does not change the company’s fundamentals. Recently, key customers recalled some models of electric vehicles, which aroused market concerns about the company’s products. However, we believe that the recall of key customers is due to the software control, which affects the closing of the electronic expansion valve. It is not a hardware problem and has nothing to do with the company’s products. Therefore, this incident does not change the company’s fundamentals, and the company’s competitive advantage and the pace of new energy vehicle customer expansion remain stable.
The subsequent consumer recovery ushered in the release of household appliance demand. As the leader of refrigeration parts, the company determined to benefit from the demand side. The marginal improvement of real estate policy + consumer recovery is expected to boost the overall performance and valuation of the household appliance sector. In the past two years, affected by multiple factors such as the strict control of real estate policies, the rise of raw material prices and sea freight, the overall performance of the household appliance sector has been poor. Superimposed on the downward consumption caused by the epidemic and the phenomenon of cold summer, the overall sales growth of household appliances has slowed down in the past two years. But in the near future, first of all, there are frequent favorable policies for real estate. As a post cycle industry of real estate, referring to the past real estate policy cycles, we believe that the marginal easing of real estate policy is expected to boost the overall market confidence and positive mood in the home appliance sector.
Secondly, the consumption downturn after the epidemic has superimposed 21 years of cold summer, which has affected China’s household appliance consumption demand, and the overall sales of air conditioners have slowed down in the past two years. Referring to the historical growth rate of the online air conditioning industry, we believe that with the recovery of consumption, the demand for household appliances is expected to be released, and the air conditioning industry has entered a new round of upward sales cycle. Therefore, the performance and valuation of the sector are expected to boost at the same time, and both downstream machine manufacturers and upstream industrial chain parts enterprises will benefit.
On the supply side, the air conditioning industry has entered a new cycle of replenishment of inventory, and the overall prosperity of the industrial chain has improved. At the same time, after the epidemic, the industry has cleared significantly, and the inventory level has decreased significantly. The inventory level of air conditioning in the current month has decreased significantly from 32 million units in the peak period to 25 million units. The superposition of new energy efficiency standards promotes the iterative upgrading of products. The trend of replenishing inventory of new products in the industry is clear. We believe that the air conditioning industry as a whole will usher in better growth in the future, The overall prosperity of the industrial chain is expected to rebound.
The auto parts business has been brought in steadily, and the company is expected to further expand high-quality new energy customers outside China. The company began to layout the field of new energy vehicles as early as 2012, and firmly ranks among the industry leaders with outstanding technology and production advantages. By segment, as of 21q3, the new energy vehicle business contributed 80% of the revenue of the company’s auto zero business. At the same time, the overall revenue of the company’s auto zero business was 3.332 billion yuan, a year-on-year increase of 109.33%; The net profit attributable to the parent company was 401 million yuan, a year-on-year increase of 56.85%. At present, the company has basically built a customer network, covering world-famous new energy models, and has production bases in Mexico, Poland and India. As China’s new forces of car making set sail, the company’s new energy orders are further increased, the scale effect is prominent, and the cost is reduced, which is expected to drive the company’s performance to further exceed expectations.
Profit forecast and valuation
We are optimistic about the steady growth of the company’s home appliance business and the outbreak of new energy business. It is estimated that the company’s operating revenue from 2021 to 2023 will be 154.70/208.00/27.169 billion yuan respectively, with the corresponding growth rate of 27.75% / 34.46% / 30.62% respectively; The net profit attributable to the parent company was 1.691 billion yuan / 2.375 billion yuan / 3.484 billion yuan respectively, with a corresponding growth rate of 15.68% / 40.44% / 46.69% respectively. The corresponding PE is 43x / 31x / 21x respectively.
Risk tips
The recovery of consumer demand for household appliances is less than expected, and the price fluctuation risk of raw materials.
