\u3000\u3 China Vanke Co.Ltd(000002) 048 Ningbo Huaxiang Electronic Co.Ltd(002048) )
The company recently released the performance forecast for 2021. The net profit attributable to the parent company in the whole year was 1.19 ~ 1.32 billion yuan, with a year-on-year increase of 40% ~ 55%; Earnings per share ranged from 1.46 to 1.62 yuan, slightly exceeding expectations. China’s auto sales will continue to pick up in 2022, and the company’s performance is expected to grow steadily. The company recently released the employee stock ownership plan (Draft) for 2022, which is expected to improve the incentive mechanism, promote steady growth of performance and benefit the long-term and healthy development of the company. The company actively responds to the industry trends of new energy and intelligence. In 2021, new energy orders accounted for nearly 20%, of which the value of Tesla bicycle is the highest and is expected to exceed 5000 yuan; Expand new products such as intelligent cockpit through acquisition and other ways, and the future prospect is promising. We expect the company’s earnings per share from 2021 to 2023 to be 1.53 yuan, 1.86 yuan and 2.21 yuan respectively, maintaining the buy rating.
Key points supporting rating
The performance in 2021 is slightly higher than expected, and it is expected to grow steadily in 2022. The company expects to realize a net profit attributable to the parent company of RMB 1.19 ~ 1.32 billion in 2021, with a year-on-year increase of 40% ~ 55%. It is expected that the business in China will continue to improve, due to the loss reduction outside Shanghai. Since 2014, the company’s European business has sustained large losses, which has seriously dragged down the company’s performance. In October 2020, the company issued an announcement on the implementation of the “European business restructuring plan” and formulated the European restructuring plan. The measures include the closure of HSB factory in Germany, layoffs of Hib factory in Germany and step-by-step transfer of British business. All the implementation has been completed in 2021, which is expected to continuously improve the company’s performance. In 2022, the chip shortage is expected to be gradually alleviated, China’s automobile sales continue to pick up, and the company’s performance is expected to grow steadily.
The issuance of the employee stock ownership plan is conducive to the long-term and healthy development of the company. The company recently released the employee stock ownership plan (Draft) for 2022. The assessment objectives for 2025 include operating revenue of no less than 30 billion yuan, net profit of no less than 2.1 billion yuan and net profit margin of no less than 7.0%. The employee stock ownership plan covers 51 middle and senior managers and business backbones. It is expected to improve the incentive mechanism, promote the steady growth of performance and benefit the long-term and healthy development of the company.
The proportion of new energy business increased rapidly. In recent years, the sales volume of new energy vehicles outside China has increased rapidly. The company has actively developed relevant businesses. In 2021, new energy obtained orders accounted for nearly 20%. The main customers include Tesla, Volkswagen, Weilai, ideal, Xiaopeng, etc. among them, the value of supporting Tesla bicycles is expected to exceed 5000 yuan, which will continue to benefit from the high growth of its sales volume. In terms of new energy products, the company has strong competitiveness in the fields of battery injection molding parts, trim strips and thermoforming, and plans to vigorously develop the business of battery boxes, which is expected to help the rapid growth of performance.
The prospect of intelligent layout is promising. The company acquired 75% equity of Shanghai Yirui in 2021, which is expected to improve the R & D capacity of new products such as software and electronics such as intelligent cockpit. The company’s original products cover multiple links of the intelligent cockpit. In addition to some external assets of major shareholders, in the future, through the effective series connection of Shanghai Yirui, it can form integrated products such as the intelligent cockpit. The value of a single car is expected to exceed 10000 yuan, which is in line with the intelligent development trend and has a promising future.
Valuation
Considering the impact of overseas restructuring and other factors, we adjusted the earnings forecast. It is estimated that the company’s earnings per share from 2021 to 2023 will be 1.53 yuan, 1.86 yuan and 2.21 yuan respectively. The valuation is at a low level and the buy rating is maintained.
Main risks of rating
1) the automobile sales volume is lower than expected; 2) Overseas losses are less than expected; 3) The price of raw materials has risen sharply.
