\u3000\u3 Shengda Resources Co.Ltd(000603) 348 Wencan Group Co.Ltd(603348) )
Event overview
On May 18, 2022, the signing ceremony for the procurement of super large intelligent die casting units between Wencan group and Lijin group and the strategic cooperation between Wencan group and Lizhong Sitong Light Alloys Group Co.Ltd(300428) heat-free materials was held in Tianjin xiongbang Die Casting Co., Ltd. of Wencan group.
Analysis and judgment:
Strong joint integration, abundant orders
Wencan group + Lijin group: Based on the strategic cooperation agreement signed by both parties in 2021 (2 sets of 6000t + 3 sets of 4500t + 1 set of 3500t + 1 set of 2800t + 2 sets of 9000t), according to the business growth demand, the company will continue to purchase 9 sets of die-casting machines from Lijin (2 sets of 7000t + 2 sets of 4500t + 3 sets of 3500t + 2 sets of 2800t). At that time, it will have a total of 6 sets of super large die-casting equipment, that is, 2 sets of 6000t + 2 sets of 9000t + 2 sets of 7000t. We believe that the company will actively purchase large die-casting machines, The speed of production expansion is accelerating, showing that there are abundant orders for integrated structural parts and body structural parts.
Wencan group + Lizhong Sitong Light Alloys Group Co.Ltd(300428) : Based on the past cooperation between the two sides in the material technology of body structure parts, further jointly develop heat-free materials suitable for super large integrated aluminum castings. At the same time, both parties will sign the agreement on confidentiality and exclusive supply of products for technical and business cooperation for the heat-free materials developed in cooperation, and maintain the exclusive procurement and exclusive supply of the heat-free materials developed in cooperation within the scope agreed in the agreement (the supporting customers have been provided before the agreement takes effect (Lizhong or its subsidiaries need to provide the customer list to the company for the consent of the company) The automobile main engine factory (including the foundry invested in the automobile main engine factory system) produces and uses in the system or other customers approved by Party A or jointly developed by both parties).
The world’s first 9000t super large die-casting island was successfully put into trial production in xiongbang, Tianjin on April 18. The first batch of 9000t large-scale integrated bottom sector die-casting auto parts were successfully off the assembly line, and the product performance met the requirements of customers and reached the international leading level. We believe that the company has signed strategic cooperation agreements with Lijin group and Lizhong Sitong Light Alloys Group Co.Ltd(300428) to jointly promote the development of super large integrated casting products, and has great leading advantages in equipment and materials. With the gradual mass production of orders in hand, with many years of experience in body parts manufacturing (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 seize a certain share.
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. We believe that the rise of the company is not only the leading process of lightweight equipment and management, but also the high performance of potential competitors under the trend of lightweight technology and management.
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 and accelerates the globalization of the acquisition of Bailian, the gradual mass production of orders on hand will drive the high growth of performance. Considering the impact of the rise in the price of raw materials and the lack of core, the company maintains the profit forecast: the company’s revenue in 22-24 years is expected to be 5.23/69.4/8.89 billion yuan, the net profit attributable to the parent company is expected to be 4.0/6.4/88 billion yuan, the corresponding EPS is 1.51/2.44/3.36 yuan, the corresponding closing price of 44.45 yuan / share on May 18, 2022, and the PE is 27 / 17 / 12 times respectively, Maintain 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.
