\u3000\u30 China Baoan Group Co.Ltd(000009) 13 Zhejiang Qianjiang Motorcycle Co.Ltd(000913) )
Event overview
The company released the plan for non-public offering of A-Shares in 2022: it plans to issue 58 million shares to Geely maijie Investment Co., Ltd. (hereinafter referred to as “Geely maijie investment”. After penetration, Li Shufu holds 95.9% and Li Xingxing holds 4.1%), accounting for 12.8% of the total share capital. All the raised funds will be used to supplement working capital after deducting the issuance expenses.
In the same period, the company issued the restricted equity incentive plan for 2022 (Draft): it plans to grant 15.87 million restricted shares, accounting for 3.5% of the total share capital. The total number of incentive objects is 162, mainly covering the company’s directors, senior managers, middle managers, core technicians and backbone.
Analysis and judgment:
The actual controller’s increase in shareholding shows his determination to the long-term development of the company
According to the company’s plan for non-public offering of A-Shares in 2022, the company plans to invest 58 million non-public shares in Geely maijie, accounting for 12.8% of the company’s total share capital. The issue price is 8.7 yuan / share, which is 27.2% lower than the current price. The total amount of funds raised shall not exceed 500 million yuan. The issuing object shall subscribe in cash at one time and will be used to supplement working capital after deducting the issuance expenses. After the issuance is completed according to the upper limit of this issuance, the equity proportion of Geely maijie investment and its concerted actors Li Shufu and Geely technology will be increased to 37.7% (the shareholding proportion of Geely technology before the issuance is 29.8%), demonstrating its firm confidence in the future development of the company.
On January 28, 2022, Geely technology signed the share transfer agreement on Zhejiang Qianjiang Motorcycle Co.Ltd(000913) with Geely maijie investment to transfer its 29.8% equity of the company to Geely maijie investment through agreement transfer. The share transfer is still in progress and the transfer registration formalities have yet to be completed. After the completion of the handling, the controlling shareholder will be changed to Geely maijie, the equity structure will be clearer, and the actual controller is still Mr. Li Shufu.
Implementation of equity incentive scheme to ensure the long-term development of the company
The company issued the restricted equity incentive plan (Draft) for 2022 in the same period. It plans to grant 15.87 million shares of restricted shares, accounting for 3.5% of the total share capital. The grant price is 5.9 yuan / share, which is 50.0% lower than the current price. The total number of incentive objects is 162, mainly covering the company’s directors, senior managers, middle managers, core technicians and backbone. Among them: 1) at the level of directors and senior executives, covering all five core executives, the general manager, deputy general manager, chief financial officer, secretary and chief engineer were granted 200 / 80 / 60 / 50 / 800000 shares respectively, accounting for 29.6% of the total granted shares; 2) The number of middle-level managers, core technicians and backbones is 157 (by the end of 2021, the total number of on-the-job employees is 4315, covering 3.6%).
Performance assessment requirements for 20222025 at the company level:
1) net profit: Based on 2021, the growth rate shall not be less than 20%, 40%, 60% and 80% respectively, and the corresponding deduction of the minimum limit of non parent company shall be RMB 2.2/2.6/3.0/330 million respectively;
2) Revenue: Based on 2021, the growth rate shall not be less than 10%, 20%, 30% and 40% respectively, and the corresponding minimum revenue limit shall be 47.4/51.7/56.0/6.03 billion yuan respectively;
3) R & D Investment: Based on 2021, the growth rate shall not be less than 10%, 20%, 30% and 40% respectively.
The overall performance assessment indicators are relatively conservative. We believe that this will help the company attract and retain excellent talents, fully mobilize the enthusiasm of the company’s middle-level managers and core backbone personnel, and ensure the long-term development of the company.
22q1: the sales volume of medium and large platoons increased rapidly, and the increase of expenses reduced profits
Revenue side: the revenue of 22q1 was 930 million yuan, a year-on-year increase of + 1.5%, lower than the growth rate of 250cc + sales volume of China Automobile Association in 22q1, which was mainly due to the decline of small platoon model 22q1, resulting in the overall sales volume of 22q1 decreased by 8.5% to 82000 vehicles year-on-year;
Profit side: the net profit attributable to the parent company in 22q1 was 35 million yuan, a year-on-year increase of – 40.7%, deducting 33 million yuan from the non parent company, a year-on-year increase of – 27.9%, the net interest rate was 3.8%, and a year-on-year increase of – 2.7pct, which was mainly affected by the increase of taxes, sales + Management + financial expenses, so as to offset the increase of 0.7pct gross profit margin year-on-year. Of which:
1) tax: year on year + 17 million yuan. The increase in sales of large displacement motorcycles resulted in an increase in consumption tax and surtax;
2) sales expenses: year-on-year + 09 million yuan, increased publicity expenses, added sales offices and increased staff salaries;
3) administrative expenses: year on year + 09 million yuan;
4) financial expenses: year on year + 13 million yuan, mainly due to exchange gains and losses.
2021: lithium reforming is Q4 loss, mainly due to the expected weakening of subsequent impact
Revenue side: the revenue in 2021 was 4.31 billion yuan, a year-on-year increase of + 19.3%. The revenue growth was mainly driven by the sales growth of medium and large platoons. In 2021, the company sold 111000 medium and large platoons, a year-on-year increase of + 26.6%, including 59000 domestic (+ 20.1%) and 52000 export (+ 34.9%); Among them, the revenue of 21q4 was 860 million yuan, with a year-on-year increase of – 9.3% and a month-on-month decrease of – 34.4%. It is expected that the sales volume of medium and large platoon models will be reduced under the influence of the off-season and the fluctuation of exchange rate;
Profit side: in 2021, the net profit attributable to the parent company was 238 million yuan, a year-on-year increase of – 0.8%, and 185 million yuan not attributable to the parent company was deducted, a year-on-year increase of – 3.5%; Among them, the net profit attributable to the parent company in 21q4 is – 37 million yuan and the deduction of non attributable to the parent company is – 43 million yuan. The loss is mainly affected by three aspects:
1) in October 2021, the company became the reorganization investor of Qianjiang lithium battery, and the asset impairment of 21q4 is about 68 million yuan (before tax), but the subsequent impact is expected to be weakened;
2) exchange loss of 25 million yuan (before tax), but interest income of 18 million yuan;
3) the increase in investment in R & D materials and molds resulted in a year-on-year increase in R & D expenses of 17 million yuan (before tax).
If the above effects are restored, the actual profit of 21q4 is about 49 million yuan (others are affected by the rise of raw material prices), which is basically in line with expectations.
The sales volume of medium and large platoons increased rapidly, and the channel R & D cooperation was comprehensively upgraded
The rapid growth of sales volume and performance contribution of medium and large displacement motorcycles is the company’s current core focus. 250cc + market share ranks first in the industry. Since the second half of 2021, the company has continued to expand its product pedigree and ushered in a new round of product cycle: 1) the performance of four cylinder imitation race 600 has continued to be excellent; 2) Flash 300s, race 350 and race 250 increase entry-level sales. In the future, benali and qjmotor brands will form a high-low combination: 1) benali brand will be further improved and return to world-class in the medium and long term; 2) Qjmotor brand complies with the national trend, and the price is going down, facing the spring breeze and Longxin competition.
Comprehensively upgrade channels, R & D and external cooperation to consolidate their competitiveness:
1) channels: deepen the reform of direct marketing mode of Benelli and qjiang channels, and focus on promoting the restructuring of Beijing, Anhui, Jiangsu, Shanghai, Shaanxi and Guangdong after Yunnan, Guangxi and Zhejiang and Fujian;
2) R & D: Zhejiang Qianjiang Motorcycle Co.Ltd(000913) Shanghai company officially opened at the end of November 2021 and set up three centers of new energy R & D, industrial design and international foreign trade, which is expected to improve the company’s model appearance and forward-looking technology R & D capability;
3) cooperation: on December 8, 2021, the company and Harley joint venture (Zhejiang Jisheng locomotive) officially completed the registration and accelerated the mass production and landing of target motorcycles (338cc displacement, 500cc displacement and motorcycles agreed in writing by both parties).
Investment advice
In view of the impact of the short-term epidemic disturbance and the rise of raw material prices, the profit forecast is lowered. It is expected that the company’s revenue in 20222023 will be adjusted from 5.981/7.427 billion yuan to 5.398/6.657 billion yuan, EPS will be adjusted from 1.38/1.82 yuan to 0.71/0.93 yuan, and the new revenue forecast in 2024 will be 8.130 billion yuan and EPS forecast will be 1.25 yuan, corresponding to the closing price of 11.95 yuan / share on May 20, 2022. PE will be 17 / 13 / 10 times respectively, maintaining the “buy” rating.
Risk tips
The tightening of motorcycle ban and restriction policies has led to the decline of motorcycle demand in China; The introduction of a large number of new models of foreign brands has led to intensified market competition; The market expansion of qjmotor’s new brand is less than expected; The non-public offering needs to be approved by relevant departments.
