\u3000\u3 Shengda Resources Co.Ltd(000603) 129 Zhejiang Cfmoto Power Co.Ltd(603129) )
Events
On March 23 local time, the U.S. trade representative’s office said it would resume tariff exemption for some Chinese imports. The tariff exemption involves 352 of the previous 549 pending products. The exemption period will be traced back to October 12, 2021 and until December 31, 2022.
Key investment points
Tariff exemption is expected to rise, and if successful, it is expected to significantly increase the company’s performance
Although the company is not included in the 352 exemption list this time, combined with the recent Zte Corporation(000063) victory and the implementation of tariff exemption for some Chinese goods, there are signs of easing Sino US trade frictions. The company has had successful experience in tariff exemption before, and it is expected to significantly increase profits if it obtains formal exemption in the future. At the beginning of 2020, the company has successfully received the tariff rebate of US $9.13 million from July 2018 to July 2019, and extended the tax exemption period to the end of 2020. Since 2021, the company’s ATV products of four-wheel vehicles exported to the United States have been subject to a new 25% tariff. If the subsequent tariff exemption is successful, the company’s performance will be greatly improved.
In 2021, the company’s export of four wheeled vehicles increased by 127% year-on-year, and the market share of North America continued to increase
The United States is an important overseas market for the company, and the market share of four-wheel vehicles in North America continues to increase. The consumption of four wheeled vehicles in North America accounts for about 73% of the global consumption, which is the largest single market. According to the data of motorcycle chamber of Commerce: from January to December 2021, the company sold 167000 four-wheel vehicles, a year-on-year increase of 127%. It is estimated that the sales proportion of the company’s four-wheel vehicles in the U.S. market is about 1 / 3 of the overall sales volume. The U.S. market share is expected to increase from 3% to about 6% in 2001, and is expected to increase to 10% in the future. From January to February 2022, the company sold more than 22000 four-wheel vehicles, with a year-on-year increase of 20%. Maintain a high growth trend, and the annual sales volume of four-wheel vehicles is expected to exceed 200000 units.
In 2021, the company’s export of 250ml + large displacement two wheeled vehicles increased by + 265% year-on-year, which is expected to become a new growth point. In 2021, the company achieved a sales volume of 100000 + two wheeled vehicles, with a year-on-year increase of 30%. Among them, the overall sales volume of large displacement two wheeled vehicles above 250ml was about 33000 units, a year-on-year increase of + 52%; The export sales volume was about 17000 units, a year-on-year increase of 265%. From January to February 2022, the company’s total export sales of large displacement two wheeled vehicles with a capacity of more than 250ml exceeded 7000, with a year-on-year increase of 370 +%. We expect that in 2022, the company’s export of large displacement two wheeled vehicles with a capacity of more than 250ml is expected to achieve a sales level of nearly 40000 units, which is expected to drive a significant increase in the revenue of the two wheeled vehicle sector and become a new growth point for the whole year.
Profit forecast and Valuation: the net profit CAGR in the next three years is 39%, maintaining the “buy” rating. It is estimated that the net profit attributable to the parent company from 2021 to 2023 will be 420 / 71 / 960 million yuan, with a year-on-year increase of 16% / 69% / 34% and PE of 39 / 23 / 17 times. From 2021 to 2023, the net profit CAGR is 39%. Based on the gradual increase in the market share of four-wheel vehicles and two wheel vehicles, the company has a deep understanding of consumers and is good at building popular models, and maintains the buy rating.
Risk warning: overseas development fails to meet expectations; Intensified competition in China; Raw materials, sea freight and exchange rate fluctuation risk
