\u3000\u3 Shengda Resources Co.Ltd(000603) 348 Wencan Group Co.Ltd(603348) )
Event overview
The company issued 2021 annual report:
In 2021, the company achieved a revenue of 4.11 billion yuan, a year-on-year increase of 58.0%; The net profit attributable to the parent company was 100 million yuan, a year-on-year increase of 16.0%; Deduction of net profit not attributable to the parent company was RMB 90 million, with a year-on-year increase of 3.0%;
Among them, the revenue of 2021q4 was 1.15 billion yuan, basically the same as that of the previous year, and the net profit attributable to the parent company was 30million yuan, a year-on-year increase of 193.4%, turning losses into profits on a month on month basis; Net profit deducted from non parent company was RMB 20 million, with a year-on-year increase of 16.3%, turning losses into profits month on month.
Analysis and judgment:
The revenue of the Department increased rapidly, and the proportion of new energy increased significantly
In 2021, the company achieved a revenue of 4.11 billion yuan, a year-on-year increase of + 58.0%, of which: 1) headquarters: in 2021, the company achieved a revenue of 1.92 billion yuan, a year-on-year increase of + 20.1%. We judged that the performance was better than the industry, mainly benefiting from the incremental contribution of new energy customers such as Weilai. Among them, the revenue of products applied to new energy vehicles reached 730 million yuan, a year-on-year increase of + 143.3%, accounting for 37.8% (18.6% in 2020). It is expected that with the gradual mass production of more fixed-point new energy sources, Continuous high growth period; 2) France Bailian: in 2021, it achieved a revenue of 2.19 billion yuan, a year-on-year decrease of – 8.9%. We judge that the year-on-year decline is mainly affected by the lack of core in the automotive industry. It is expected that with the gradual easing of the lack of core, it is expected to rebound this year. In 2021, the net profit reached 100 million yuan, a year-on-year increase of + 8.0%. After deducting the impact of French Bailian and equity incentive related behaviors, the net profit of the Department reached 70 million yuan, a year-on-year decrease of – 52.0%. We judged that the significant decline was mainly due to the decline of customer orders with high gross profit margin due to the lack of core, the decline of capacity utilization and the rise in the price of raw materials.
The gross profit margin and short-term pressure expenses decreased
The gross profit margin of the company in 2021 reached 18.5%, with a year-on-year rate of – 5.1pct, of which the gross profit margin in 2021q4 was 18.9%, with a year-on-year rate of – 3.1pct and a month on month rate of + 3.0pct. We judge that the significant year-on-year decline is mainly affected by the continuous upward rise of aluminum price, and the month on month rise reflects the operation of the quarterly price adjustment mechanism. The company and the main engine factory adopt the cost plus pricing mode. The price rise of raw materials will not be affected by prolonging the cycle. However, due to the lag of price adjustment (or compensation) with the main engine factory, the quarterly profit margin fluctuates. We judge that the overall impact of raw materials this year is expected to be less than that in 2021. In terms of expenses, in 2021, the sales expense rate, management expense rate, R & D expense rate and financial expense rate were 1.3%, 7.0%, 2.9% and 2.0% respectively, with a year-on-year increase of -0.2pct, – 2.3pct, – 0.3pct and – 0.7pct respectively. The expenses were reasonably controlled, and the integration effect gradually appeared, which is expected to further improve quality and efficiency.
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 6000t + 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 components and body structural parts. At the same time, the first set of 9000t super large die-casting island in the world was successfully put into trial production in xiongbang, Tianjin on the 18th. 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, with many years of body parts manufacturing experience (the income of body structural parts in 2021 was 650 million yuan, year-on-year + 84%), it is expected to quickly improve the yield, realize benefit, 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 in 22-23 years will be adjusted from 5.29/6.51 billion yuan to 5.21/6.94 billion yuan, and the net profit attributable to the parent company will be adjusted from 4.0/64 billion yuan to 4.0/64 billion yuan, It is estimated that the new revenue and net profit attributable to the parent company in 2024 will be 8.89 billion yuan and 880 million yuan, corresponding to EPS of 1.51/2.44/3.36 yuan, corresponding to the closing price of 32.26 yuan / share on April 21, 2022, and PE of 21 / 13 / 10 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.
