\u3000\u3000 Anhui Zhongding Sealing Parts Co.Ltd(000887) (000887)
Event overview: on January 18, 2022, the company announced that Anhui Zhongding Sealing Parts Co.Ltd(000887) Sun Company Chengdu WANGJIN Auto Parts Co., Ltd. recently received a customer notice and Anhui Zhongding Sealing Parts Co.Ltd(000887) became a batch supplier of chassis lightweight assembly products for a new energy platform project of a head brand main engine factory in China. The life cycle of the project is 5 years, and the total amount of the life cycle is about 1.211 billion yuan.
The chassis lightweight assembly product was again designated for the new energy platform project of China head main engine factory, and the total fixed amount of lightweight projects reached 3.094 billion yuan. Chassis lightweight business is an important link for the company to realize the strategic transformation of intelligent chassis. Sichuan WANGJIN, a subsidiary of the company, has the world’s leading technology in the field of lightweight. The core product ball joint hinge assembly is the core safety component and performance component of chassis system. This time, it was once again designated as the chassis lightweight assembly product of a new energy platform project of a head brand OEM in China, which fully shows that the company’s layout in the field of chassis lightweight system assembly has achieved initial results, and the company’s chassis lightweight products have entered the accelerated expansion period. Up to now, the cumulative total order amount of the company’s lightweight products has reached 3.094 billion yuan. Assuming that the average life cycle of the designated chassis lightweight project is 5 years, the domestic chassis lightweight project obtained by the company has contributed about 620 million yuan of revenue every year.
The intelligent chassis business has made full efforts, and has accumulated a fixed amount of nearly 10 billion yuan in China. The “incremental track” continues to open up the growth space of the company, Driving the company’s performance valuation “. the company’s last cycle peak in the automotive industry was 2017, with a net profit attributable to the parent company of 1.127 billion yuan and a net profit attributable to the parent company of 493 million yuan in 2020. We expect that the net profit attributable to the parent company is expected to reach 1.05 billion yuan in 2021. With the cyclical recovery of the automotive industry, the repeated immunization against overseas epidemics and the promotion of the company’s intelligent chassis strategy, the company has ushered in a large-scale performance inflection point. At present, the company is basically stable The business revenue (automobile sealing and damping rubber) has ranked among the top 100 global parts. The cost advantage brought by large-scale, high-quality customer structure, as well as the deep absorption and localization of overseas advanced technology provide the company with stable cash flow. In addition, the company accelerated the layout of incremental business (thermal management pipeline assembly, lightweight, air suspension system), mastered the core technology through high-quality M & A, realized localization through reverse investment, and has the first mover advantage. It is expected to quickly seize the market in the transition period of electric, intelligent and lightweight industry. Up to now, the intelligent chassis announced by the company has won a total of 9.805 billion yuan of fixed-point projects in China, including 4.962 billion yuan of thermal management, 3.094 billion yuan of lightweight and 1.749 billion yuan of air suspension. Incremental business is expected to significantly open the company’s second growth curve and drive the company’s performance and valuation.
Investment suggestions:
It is estimated that the company will achieve a revenue of RMB 13.028/13.715/14.929 billion and a net profit attributable to the parent company of RMB 1.050/11.50/1.388 billion from 2021 to 2023. The current market value corresponds to 30 / 27 / 23 times of PE from 2021 to 2023. The company’s valuation is significantly lower than 32 times the average valuation level of Shenwan parts sector in 2021 (wind unanimously predicted). With the cyclical recovery of the company’s performance and the continuous promotion of the smart chassis strategy, as a global leading company of parts and components, it is expected to enjoy a valuation premium and maintain the “recommended” rating.
Risk tip: raw material price fluctuation leads to low gross profit margin, new product expansion is less than expected, exchange rate risk, etc.
