Jiangsu Pacific Precision Forging Co.Ltd(300258) (300258)
China excellent automobile Fine Forging Co., Ltd
The company’s main products are automobile differential bevel gear, transmission combined gear / shaft parts, EDL gear, synchronizer ring gear, clutch drive disc hub parts, parking gear, motor shaft and differential assembly for new energy vehicles, etc. its customers include mainstream international automobile giants, high-quality independent automobile enterprises and new forces in automobile manufacturing. At present, the company is the leader in the subdivision industry of precision forged gears for passenger cars in China. The production and sales of precision forged gears for passenger cars, combined gears and EDL gears rank among the forefront of the industry.
Under the background of the rise of independent industries, the company’s future growth logic is clear
At present, Chinese auto parts companies including Jiangsu Pacific Precision Forging Co.Ltd(300258) rely on the advantages of high industrial chain integrity, high production and operation efficiency and high cost performance of products under China’s effective epidemic prevention and control, accelerate the “import substitution” and “going global”, and their income is expected to achieve sustained and rapid growth in the future. In the short term, the production and sales of the company’s top five customers are expected to follow the automotive industry to achieve a better recovery next year, especially the north and South Volkswagen. Affected by the “lack of core” this year, the sales volume has declined significantly. After the continuous improvement of chip supply next year, the short-term recovery elasticity is expected to be strong, and the company is expected to fully benefit. At the same time, the company is actively developing high-quality independent vehicles such as great wall, Chang’an, Geely, SAIC, Byd Company Limited(002594) and new power customers of Chinese head car manufacturing such as weixiaoli. It is expected to benefit from the rise of independent vehicles in the future.
The company’s industrial layout is about to blossom and bear fruit, which is expected to contribute to important performance increment
In recent years, the company has successively laid out production bases in Ningbo, Tianjin and Chongqing other than Jiangyan headquarters. 1) Ningbo Electric Control: solenoid valve products will become an important growth point in the future; 2) Tianjin transmission technology: since the second half of 2020, the revenue of Tianjin subsidiary has accelerated upward. With the constant increase projects of Tianjin company put into operation in the future, it will further help Tianjin company accelerate the growth of revenue and profit. We believe that Tianjin subsidiary will become an important growth point of the company’s future business; 3) Chongqing subsidiary: it is expected that Chongqing company will fully complete phase I design capacity in the fourth quarter of this year, so as to lay a good foundation for the rapid growth of production and sales next year.
Actively promote the transformation of electrification business and take-off is imminent
The revenue of the company’s new energy vehicle supporting products continued to grow rapidly, and the proportion of revenue increased from 0.86% in 2017 to 8.62% in 2021h1. The development of the new energy vehicle supporting market has begun to take effect. Since 2016, the company has successively won fixed points and nominations for differential assembly products such as Volvo, BorgWarner, global famous electric vehicle customers, Japanese famous brands and Chinese famous technology companies. In the future, new energy differential assembly products are expected to continue to grow in large quantities and become an important growth point of the company’s new energy supporting business. In particular, in the future, the company is expected to fully benefit from the strong performance of Volkswagen’s global and China’s electric vehicle sales, and help the company’s electrification business transformation to a new level.
Profit forecast and maintain the “overweight” rating
We expect that from 2021 to 23, the company will realize an operating revenue of RMB 1.374/1.708/2.155 billion, with a year-on-year increase of 14.17% / 24.32% / 26.18%; The net profit attributable to the parent company was 177 / / 247 / 331 million yuan, with a year-on-year increase of 13.57% / 39.65% / 33.99%, corresponding to EPS of 0.37/0.51/0.69 yuan / share respectively, and corresponding to dynamic PE of 35 / 25 / 19 times in 2021 / 2022 / 2023. Considering the company’s orders in hand and the certainty of the rapid growth of new energy vehicle business, the “overweight” rating is maintained.
Risk warning: epidemic control is lower than expected; Chip shortage exceeded expectations; The recovery of production and sales of major customers is lower than expected; The expansion of new energy business is lower than expected; The production capacity of the plant is lower than expected; The price rise of raw materials exceeded expectations; Exchange rate fluctuation risk; Cost growth exceeded expectations
