Zhejiang Shuanghuan Driveline Co.Ltd(002472) (002472)
event
The company released the performance forecast for 2021: it is estimated that the annual net profit attributable to the shareholders of the listed company will be 316 million yuan – 336 million yuan, which exceeds the original performance expectation of 284 million yuan, realizing a year-on-year increase of 517% – 556%, and the net profit attributable to the parent company in the same period last year will be 51.23 million yuan; EPS is 0.44 – 0.46 yuan, corresponding to 0.08 yuan in the same period last year. The company’s application for non-public offering of shares has been accepted by the CSRC.
Key investment points
The company’s annual performance exceeded expectations, and the production capacity of new energy gears and automatic transmission gears climbed to seize the market opportunity
The main reasons for the rapid growth of the company’s performance in 2021 are: with the significant easing of the epidemic in China and the release of potential consumer demand suppressed in the past three years, the annual growth rate of fuel vehicle sales is expected to turn negative into positive; 2. The domestic substitution trend of gear manufacturing is accelerating, the competition pattern changes brought about by the technological change of automobile industry, and the outsourcing mode of gear parts in main engine plants is accelerating; 3. The company complied with the trend and made strategic layout in advance, expanded and reserved the production capacity of driving system gears and automatic transmission gears of new energy vehicles, and many high-quality projects entered the rapid climbing stage, gradually releasing the production capacity and seizing the market opportunity; With the continuous improvement of the penetration rate and industry concentration of new energy vehicles, promote the share of leading cities and high performance growth; 4. The company is committed to independent innovation and technological upgrading, effectively promoting the reduction of manufacturing capacity and unit cost, realizing competitive advantages in quality, delivery time and cost, strengthening the stickiness of key customers and brand influence, reflecting the large-scale effect and improving profitability.
China’s Shanxi Guoxin Energy Corporation Limited(600617) automobile industry has developed rapidly, many new forces of automobile manufacturing have emerged and occupied the market share of complete vehicles. Major global manufacturers purchase globally and invest in and build factories in China. The automobile gear industry has ushered in new opportunities for transformation and upgrading. It is estimated that the penetration rate of new energy vehicles will reach 25% in 2025, corresponding to about 3.6/13 billion yuan in China / global pure electric gear market. The company’s large-scale capital expenditure capacity has climbed, and the gear capacity of new energy vehicles has been expanded to 1.5 million sets / year by the end of 2021. It is estimated that the market share of the company’s electric vehicle gear will increase from 25% in 2020 to 60% in 2025, and the scale of new energy gear business is expected to exceed 3.7 billion yuan, realizing a CAGR of 79%.
The company’s production expansion and fixed increase scheme for new energy vehicle gears and automatic variable gears of commercial vehicles was successfully promoted
The application for this non-public offering of shares has been accepted by the CSRC. The total amount of funds to be raised shall not exceed RMB 2 billion. The number of shares to be issued shall be calculated according to the total amount of funds raised divided by the issue price, and shall not exceed 15% of the total share capital of the company before this offering, that is, not more than 117 million shares. The objects of issuance are not more than 35 specific investors. The investment project raised by this issuance is mainly to improve the company’s production capacity in the field of transmission gears of new energy vehicles and automatic transmission gears of commercial vehicles, and will build a high-speed and low-noise transmission parts laboratory to better cope with the medium and high-end market scale and customer groups at home and abroad, so that the company can further increase its cooperation with main engine manufacturers and assembly suppliers of new energy vehicles; At the same time, it will strengthen R & D capacity, help to improve the technical level and production capacity of existing products, extend upstream and downstream to develop new products and produce more products with high-tech added value.
Profit forecast and valuation
We raised the profit forecast to the net profit attributable to the parent company from 2021 to 2023 to be RMB 320 million, RMB 450 million and RMB 670 million respectively, with a year-on-year increase of 531%, 40% and 48%; EPS is 0.48/0.67/0.99 yuan, corresponding to 55 / 39 / 26 times of PE, maintaining the “buy” rating.
Risk statement
Global core shortage and covid-19 epidemic affect the prosperity of the global automobile industry; The penetration rate of automatic transmission is lower than expected; The price of raw materials fluctuates greatly; The company’s capacity expansion progress did not meet expectations
