Zhejiang Asia-Pacific Mechanical & Electronic Co.Ltd(002284) (002284)
1、 Event overview
On December 27, 2021, the company announced that it had received the new product development notice of Great Wall Motor Company Limited(601633) recently, and the company would develop and produce the front brake caliper assembly products of B07 model as the parts development and production supplier of Great Wall Motor Company Limited(601633) .
2、 Analysis and judgment
Platform accelerated the overall rise of independent brands, and the core independent supply chain continued to make efforts
The company once again won the fixed point of the front brake caliper of Great Wall B07 model. Previously, the company successively won the fixed point of the caliper project of Great Wall H6, H7, Euler, K7 and other models. The fixed-point model is expected to be the core model of the Great Wall B30 platform, which is the key compact model platform in the Great Wall platform strategy. Great Wall Motor Company Limited(601633) accelerate the platform strategy and successively launch A30 \ B30 \ C30 platform. The platform strategy accelerates the iteration cycle of great wall models. The company has obtained the fixed-point project of the core models of the new platform of the head independent brand, and is expected to expand the matching of new models horizontally within and between the new platform. As a first-line independent brand in China, Great Wall purchases many models and categories of electronic and basic brake products from the company. The demonstration effect of the head car enterprises is expected to drive the company to continue supporting other independent brands. In the process of independent rise, the company is expected to achieve “accompanying” growth with vehicle manufacturers and become a core supplier in China’s braking field.
The global industrial transfer of basic braking and the substitution of automobile electronics import drive companies have entered a new round of rapid growth
The existing supporting customers of the company’s basic brake are mainly Volkswagen, great wall, Chang’an, GAC and SAIC, and the customer structure is high-quality. Since 2017, the main reasons for the decline of the company’s performance in recent three years have been the downward trend of the passenger car landscape cycle, the significant upward trend of raw material costs, the repeated epidemic situation and the significant increase in depreciation caused by the adverse expansion of the company’s basic braking business in the same period. The company’s basic brake capacity planning began in 14 years. At present, the project has been basically completed, and the early large-scale capital expenditure cycle has ended. With the recovery of the automobile industry and the continuous optimization of customer structure, the company’s basic brake revenue is expected to achieve a V-shaped reversal. In 2020, the company’s basic brake revenue was 2.24 billion yuan, accounting for about 11% of the market. We expect that the planned full capacity of the company’s basic brake will bring the company an annual output value of about 6 billion revenue. Under the trend of global industrial transfer of basic braking business and import substitution in the field of automotive electronics, the inflection point of the company’s high-level profit has been realized, and it is expected to usher in a round of high-quality growth in the next 3-5 years.
3、 Investment advice
It is estimated that the company will achieve a revenue of RMB 3.45/41.9/5.47 billion and a net profit attributable to the parent company of RMB 0.70/1.22/199 billion from 2021 to 2023. The current market value corresponds to 98 / 56 / 34 times of PE from 2021 to 2023. With the continuous improvement of the company’s basic brake capacity utilization and the continuous volume of automotive electronic products, the performance is expected to return to the historical high level. As a leading company in China’s brake industry, it is expected to enjoy the valuation premium and maintain the “recommended” 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.
