\u3000\u3 Shengda Resources Co.Ltd(000603) 305 Ningbo Xusheng Auto Technology Co.Ltd(603305) )
Key investment points
In line with the trend of new energy industry, customers and products continue to expand. The company is committed to the field of new energy vehicles and vehicle lightweight. The main application fields of the products include precision machined parts of core systems such as transmission system, transmission system, battery system and suspension system of new energy vehicles. By 2021, the company has three processes of die casting, forging and extrusion, basically covering the core aluminum alloy products of automotive power system, chassis system and battery system. In 2021, the revenue from t customers was 1.207 billion yuan, accounting for 39.93% of the company’s revenue. The company complies with the industrial trend of rapid development of new energy. In addition to t customers, the company simultaneously develops multiple customer groups to supply new energy parts products such as powertrain parts and battery packs.
Driven by multiple factors, the demand for lightweight increases, and the consumption of aluminum alloy for single vehicle continues to increase. “Energy saving and emission reduction” policy and “mileage anxiety” jointly promote the increase of demand for automobile lightweight. Aluminum alloy has become the preferred material for automobile lightweight because of its advantages in cost performance. In 2025, the consumption of aluminum alloy for a single car is expected to increase from 139kg in 2020 to 250kg. After the aluminum alloy upgrading of small and medium-sized parts / chassis / three electric system / body structure parts, the value of a single car will exceed 20000 yuan. According to our calculation, China’s market space is expected to reach 309.5 billion yuan in 2025, and the CAGR from 2020 to 2025 is 17.1%. As of 2018, the four processes of die casting / forging / extrusion / rolling for aluminum alloy processing accounted for 77% / 10% / 10% / 3% respectively. Among them, die casting accounts for the largest proportion because of its high production efficiency. The manufacturing process of forging products is relatively complex, but it has better performance. It is mainly for high-end models.
The cooperation of production and marketing drives the deterministic growth of the company’s performance, diversified customer structure and abundant orders on hand.
The company continues to raise funds and investment to extend the process from casting to forging and extrusion. By setting production by sales, the capacity utilization rate has remained at a high level of more than 80% since 2016, and the machining capacity utilization rate is close to saturation. By 2021, the company has built and put into operation about 399 mu of land. From 2022 to 2023, three new factories No. 7 / No. 8 / No. 9 will be put into operation, and about 372 mu of land will be newly put into operation. According to our calculation, all land can support an output value of about 8 billion yuan.
In March 2022, the company announced that it would purchase 500 mu of land in Huzhou, and the production capacity is expected to be further expanded. Benefiting from the endorsement of customer t in the new energy industry, the company continued to explore new customer groups, and the proportion of revenue of customer T and other top five customers continued to decline. According to the disclosure of the company’s public research records, by the end of 2021, the amount of orders on hand of the company was about 5 billion yuan, an increase of about 216.26% over the whole year of 2020. The growth of revenue has strong certainty, and the new capacity can be reasonably digested in the future.
Profit forecast and investment rating: 1) continuous release of existing land reserve capacity; 2) Orders continue to increase with the growth of customer sales; 3) The price of raw materials fluctuates within a reasonable range, the gross profit margin gradually rises compared with 2021, and the cost rate is basically the same. Based on the above core assumptions, we predict that the company’s revenue from 2022 to 2024 will be RMB 4.380/5.735/7.860 billion, with a year-on-year increase of + 44.9% / + 30.9% / + 37.1%, the net profit attributable to the parent company will be RMB 596 / 812 / 1113 million, with a year-on-year increase of + 44.2% / + 36.3% / + 37.0%, the corresponding EPS will be RMB 1.33/1.82/2.49 respectively, and the corresponding PE will be 23.23/17.04/12.44 times respectively. It is first covered and given a “buy” rating.
Risk tip: the supply shortage of chips exceeded expectations, and the price rise of aluminum alloy exceeded expectations.
