The rising price of bulk raw materials has put pressure on the profitability of the auto parts industry. Since 2020, the prices of bulk raw materials such as steel and aluminum have continued to rise, putting pressure on the cost side of the auto parts industry, resulting in a decline in the profitability of the industry. From the first quarter to the fourth quarter of 2020, the price of raw materials such as cold-rolled sheet and LME aluminum price increased, and the gross profit margin of auto parts industry gradually decreased, from 19.3% in the first quarter of 2020 to 18.6% in the fourth quarter of 2020, a decrease of 0.7 percentage points. In 2021, the price of raw materials maintained an upward trend. The gross profit margin of the parts industry in the first to third quarters of 2021 was 18.8%, 18.5% and 18.4% respectively, and the gross profit margin decreased quarter on quarter.
Upstream costs have risen, and the anti risk ability of parts companies has been significantly differentiated. 2016q4 and 2021q3 are two stages of sharp rise in raw material prices. Based on the analysis of the profitability performance of some parts enterprises in the two stages, the anti risk ability of parts companies is obviously differentiated. The company has a strong ability to negotiate with customers on the price increase of raw materials, and can resist the pressure from customers on the price increase of raw materials. At the same time, the company has a strong ability to negotiate with customers on the price increase of raw materials morethan 1 percentage point The fluctuation range of gross profit margin of Changchun Faway Automobile Components Co.Ltd(600742) , Fuyao Glass Industry Group Co.Ltd(600660) etc. in the two stages shall not exceed 1 percentage point Xingmin Intelligent Transportation Systems (Group) Co.Ltd(002355) , Huada Co., Ltd., Zhejiang Wanfeng Auto Wheel Co.Ltd(002085) etc. the gross profit margin decreased by more than 1 percentage point in both stages, and the profitability was under significant pressure when the price of upstream raw materials increased.
Parts companies take measures to combat rising raw material costs. Faced with the cost pressure caused by the continuous rise of raw material prices, while doing a good job in reducing costs and increasing efficiency, some auto parts companies can take measures such as linkage price adjustment mechanism, negotiation and price difference compensation to transmit the cost pressure of some raw materials to downstream customers and reduce the impact of the rise of raw material prices on their profitability, such as Suzhou Sonavox Electronics Co.Ltd(688533) , Ningbo Tuopu Group Co.Ltd(601689) , Jiangsu Pacific Precision Forging Co.Ltd(300258) , etc. In addition, it is expected that the gross profit margin will be relatively less affected by the pressure of rising costs through product and customer upgrading and capacity utilization improvement, such as Suzhou Sonavox Electronics Co.Ltd(688533) , Jiangsu Xinquan Automotive Trim Co.Ltd(603179) etc.
Investment proposal and investment object
Under the pressure of market concerns about demand and rising raw material prices, from January 1 to March 18, the parts sector fell by 17%, far more than most industries, and most parts companies fell by more than 30%. At this stage, the price rise of upstream raw materials has an adverse impact on the profits of the parts industry, dragging down the profit growth of the industry; However, some parts companies resist the pressure of rising costs through product structure upgrading, customer expansion and capacity utilization, and their profitability is relatively less affected. The following suggestions and concerns include the following: followingthe following of the following: followingthe following of the following: Ningbo Jifeng Auto Parts Co.Ltd(603997) , Huizhou Desay Sv Automotive Co.Ltd(002920) , Ikd Co.Ltd(600933) , Jiangsu Pacific Precision Forging Co.Ltd(300258) , Shanghai Baolong Automotive Corporation(603197) , etc.
Risk tips
The risk that the price rise of raw materials exceeds the expectation, the risk that the sales volume of automobiles is lower than the expectation, and the pressure of vehicle price reduction.
