\u3000\u3 Bohai Water Industry Co.Ltd(000605) 068 Mingxin Automotive Leather Co.Ltd(605068) )
Event: on March 13, the company announced that the controlling shareholder, actual controller and some directors, supervisors and senior managers of the company planned to increase their shares in the company.
China's automobile interior decoration is the leader, with steady growth in historical performance. Founded in 2005, the company is mainly engaged in automotive interior leather, which is mainly used in automotive seats, armrests, headrests and steering wheel products, supporting many customers at home and abroad. The core customer is FAW Volkswagen, and the proportion of revenue is maintained at more than 80% throughout the year. Thanks to the company's years of deep cultivation, the average annual compound growth rate of the company's operating revenue and net profit attributable to the parent company from 2016 to 2020 was 15% and 41% respectively, and the historical performance increased steadily. Affected by the decline in the output of the core customer FAW Volkswagen caused by the lack of core in the industry, the operating revenue of the company increased slightly by 1.19% year-on-year in the first three quarters of 021, and the net profit attributable to the parent decreased by 10.25% year-on-year to 143 million yuan.
The development trend of the industry is upward, and the market share of the company is expected to increase. With the stable development of the automotive industry, the development trend of the automotive leather industry is upward, benefiting from the upgrading of automotive consumption and the improvement of the demand for automotive interior decoration by the development of electric intelligent vehicles. In terms of competition pattern, according to the company's announcement, China's automobile leather industry is highly concentrated. In 2020, the total market share of foreign capital and joint venture is about 80%, and the company's market share is about 10%. China's Haining sende and Zhenjing share markets account for about 5% and 2% respectively. Compared with foreign capital, the company not only has the advantages of technology and products, but also has the advantages of fast response, good service and high degree of cooperation; Compared with Chinese competitors, the company has advantages such as technical barriers and customer resources. Therefore, we believe that as the company launches new products, expands new customers and invests in new production capacity, the market share is expected to continue to increase.
Actively explore new customers, expand production and ensure performance growth. On the one hand, with the improvement of core shortage in the industry, the demand of major customers such as FAW Volkswagen and Audi is expected to pick up steadily; On the other hand, the company actively develops new customers. According to the company's announcement, at present, the company's orders from new customers such as SAIC GM and SAIC Volkswagen (SAIC GM onkewei and SAIC Volkswagen Tiguan, huiang, tuang, loungesuve, etc.) have been in large quantities. In the second half of 2021, the company also received Xiaopeng's fixed-point and entered the supply system of new forces for car making. As China's leader in the automotive leather industry, the company has many advantages in technology, products, production, cost performance and response speed. It is expected to support more medium and high-end customers and new energy vehicle enterprises. In addition, by the end of 2021, the company has a production capacity of 800000 pieces, and the company is also actively expanding its production. The I Po project "clean and intelligent improvement and transformation project with an annual output of 1.1 million pieces of cow leather auto leather" and the "4.0 construction project with an annual output of 500000 pieces of high-grade chrome free tanned cow leather auto leather industry" are expected to reach the production capacity by the end of 2023, and it is expected to add an annual production capacity of 110000 pieces, at which time the production capacity will reach 1.6 million pieces, Ensure the continuous growth of performance.
The new water-based super fiber has been delivered in mass production, and there are abundant orders on hand, which is expected to open up growth space. According to the company's announcement, the market demand of China's super fiber leather is 350 million square meters, but the current production capacity is only 260 million square meters, and there is a large gap between supply and demand of super fiber leather. The company has successfully developed environmentally friendly and high-end all water-based Dingdao super fiber leather, which has broken the monopoly of foreign capital and has been designated by FAW Volkswagen and other projects. With the implementation of the "intelligent manufacturing project of all water-based Dingdao super fiber new materials with an annual output of 2 million square meters", H1 company has realized a business income of 370752 million yuan in super fiber products in 2021. On the one hand, the company issued convertible bonds and invested 480 million yuan to raise funds for the water-based Dingdao super fiber new material project with an annual output of 8 million square meters. With the continuous release of production capacity and the smooth delivery of orders in hand, it is expected to usher in large-scale performance; On the other hand, relying on the company's absolute leadership in automotive leather and the technology and product advantages of the company's new water-based super fiber, the company is expected to continue to expand new customers, and the new products are expected to continue to contribute to the performance increment of the company.
Major shareholders and management plan to increase their holdings to demonstrate their confidence in development. The controlling shareholders, actual controllers and some directors, supervisors and senior managers of the company plan to increase their holdings of the company's shares with their own funds through centralized bidding and block trading. The total increase proportion is not less than 0.5% and not more than 1% of the company's total share capital, and the price of the increased shares is not more than 30.00 yuan. This increase is the first time since the listing of the company, demonstrating the confidence of major shareholders and management in the future sustainable development of the company and their recognition of the company's long-term value investment.
Investment suggestion: it is estimated that the net profit attributable to the parent company from 2021 to 2023 will be RMB 171 million, RMB 244 million and RMB 324 million respectively. Corresponding to the current market value, PE will be 23.1, 16.2 and 12.2 times respectively. It will be covered for the first time and given a "Buy-A" rating. The six-month target price is RMB 35.00/share.
Risk warning: the industry is short of core, exceeding expectations; The recovery of production and sales of core customers is lower than expected; The development of new customers is lower than expected;
