\u3000\u3 Shengda Resources Co.Ltd(000603) 348 Wencan Group Co.Ltd(603348) )
Event overview
The company announced that the company and Shenzhen Lingwei Technology Co., Ltd., a subsidiary of Lijin technology, signed a strategic cooperation agreement on the cooperation in the technology of super large die castings on May 26, 2021. Under the framework of this strategic cooperation agreement, the company purchased 7 medium and large die casting machines from Lijin Technology in the first phase, including 6000t, 4500t, 3500t and 2800t. At present, all the above 7 medium and large die casting machines have been in place and have been installed and debugged. In 2021, the company continued to purchase two 9000t die-casting machines from Lijin technology, one in Tianjin and one in Nantong.
According to the orders of the company’s customers this year and in the future and the strategic cooperation with Lijin technology, the company will continue to purchase 9 large die casting machines from Lijin technology in 2022 for the production of super large integrated structural parts and body structural parts, so as to further meet the company’s production capacity requirements.
On April 18, the first set of 9000t super large die-casting island in the world was successfully put into trial production in xiongbang, Tianjin, and the first batch of 9000t large-scale integrated base sector was successfully offline.
Analysis and judgment:
Tesla leads the general trend of integration and traditional enterprises follow up
Tesla leads the industry and the general trend of integrated die casting. Tesla reduced more than 70 parts required for the rear base sector of model 3 to two parts of model y through the integrated die-casting process. The applicable large-scale die-casting equipment is the 6000 ton die-casting machine of Lijin group. At present, Tesla has purchased 156000 ton die-casting machines, which will be applied to factories such as Shanghai, Fremont and Berlin respectively, and 8000 ton die-casting machines will be introduced later. We judge that the integrated die-casting body is expected to become an industry trend, mainly due to cost saving and performance improvement: 1) cost saving: Tesla said that the integrated die-casting body saves about 20% of the cost of modely. If time cost, production line cost and labor cost are considered, the actual effect will be higher than 20%; 2) Performance improvement: the stability of the body structure is greatly improved and the weight is lighter. We judge that new forces such as Weilai, Xiaopeng and ideal will follow Tesla to adopt integrated die-casting body, and traditional car enterprises such as Volvo and Mercedes Benz will also follow up. Integrated die-casting is expected to accelerate its penetration.
There are abundant orders for the re purchase of large die casting machines
The company plans to purchase another 9 large die-casting machines, and the first batch of 9000t integrated bottom sectors are successfully offline. According to the latest procurement plan in 2022, the company will have a total of 13 large-scale die-casting equipment, including 2 6000 tons + 2 9000t + 9 potential large-scale die-casting machines. We believe that the company actively purchases large-scale die-casting machines, the speed of production expansion continues to accelerate, showing abundant orders for integrated structural parts and body structural parts. At the same time, the company’s first 9000t super large die-casting island in the world was successfully put into trial production in xiongbang, Tianjin today. The first batch of 9000t large-scale integrated bottom sector die-casting auto parts were successfully offline, and the product performance met the requirements of customers and reached the international leading level.
We believe that the company has signed a strategic cooperation agreement with Lijin group to jointly promote the development of super large integrated casting products, and has a great leading advantage in equipment. With the gradual mass production of orders in hand and with many years of body parts manufacturing experience, it is expected to quickly improve the yield, realize benefits, accelerate the expansion of the market and occupy a certain share first.
We judge that most main engine manufacturers will not adopt Tesla’s self-made mode, mainly because of the large investment required for self production, including investment and construction of plants, purchase of machines, recruitment of personnel, etc., and the limited source of orders will lead to the scale effect not as good as the parts enterprises as third-party supporting suppliers. Compared with potential competitors in the same industry, we believe that the company’s forward-looking layout is not only equipment, but also years of precipitation in material and process research and development and rich process management experience (manifested in high yield), which is expected to rise as a lightweight leader under the general trend of integration.
Actively embrace the future lightweight leader of new forces
Actively embrace new forces and drive high performance growth. The company is the core supplier of Weilai body structural parts, supporting all models. We estimate that the supporting value of single vehicle is more than 3000 yuan. Among them, Weilai et7 has been delivered in March and et5 is expected to be delivered in September, which is likely to become a popular model. In addition, the company also supports Tesla, Byd Company Limited(002594) , Xiaopeng, ideal and other leading new energy vehicle enterprises, which is expected to drive high performance growth.
Acquire Bailian and enter the world. In 2019, the company acquired 61.96% of the equity of France Bailian Group for about 140 million euros, and will launch a compulsory tender offer for the remaining equity at the price of 38.18 euros per share. The company and Bailian Group have synergy in production process, product line and customers. With the help of Bailian Group’s local production and research capabilities in Europe, Asia and North America, the global layout is expected to accelerate, which is conducive to the company to obtain more overseas orders.
Investment advice
The company is a pioneer in integrated die casting and is expected to rise in the transformation of electric intelligence and become a leader in lightweight. Considering that the company actively embraces the leading new energy vehicle enterprises, the acquisition of Bailian accelerates globalization, and the gradual mass production of orders in hand will drive high performance growth, and considering the impact of rising prices of raw materials and lack of core, the profit forecast is adjusted: it is expected that the company’s revenue of 4.37/52.9/6.51 billion yuan will remain unchanged from 19 / 4.8/650 million yuan to 110 / 4.0/640 million yuan, and EPS will be adjusted from 0.74/1.83/2.47 yuan to 0.44/1.51/2.44 yuan, Corresponding to the closing price of 34.36 yuan / share on April 18, 2022, PE is 79 / 23 / 14 times respectively, maintaining the “buy” rating.
Risk tips
Rising prices of raw materials; The sales volume of major customers is lower than expected; The expansion of new projects and new customers is less than expected; The integration effect of Bailian Group is not as good as expected.
