\u3000\u3000 Anhui Zhongding Sealing Parts Co.Ltd(000887) (000887)
Event overview: on January 19, 2022, the company announced that Anhui Zhongding Sealing Parts Co.Ltd(000887) subsidiary Anhui tesitong Pipeline Technology Co., Ltd. recently received a notice from customers and Anhui Zhongding Sealing Parts Co.Ltd(000887) became a batch supplier of thermal management pipeline assembly products for a new platform project of a new power brand main engine factory in China. The life cycle of the project is 4.5 years, and the total life cycle amount is about 381 million yuan.
The cooling business continues to obtain fixed points from Chinese customers, and the volume and price rise together, opening the second growth curve of the company
In 2017, the company arranged the new energy heat management business through the acquisition of TFH, a global circulation leading company. TFH has advanced technologies such as createube process and TPV hose, ranking second in the market share of automotive cooling pipeline segment in the world, and has strong market competitiveness. After the company acquired TFH, it was deeply integrated, and Anhui testone was established by reverse investment in China to realize the localization of thermal management business. Previously, the company has received orders for thermal management pipeline assembly from many auto enterprises, including ideal and Xiaopeng. This time, the company has again obtained the fixed point of thermal management pipeline assembly for a new platform project of a leading brand host factory in China, with a total amount of 5.343 billion yuan. Compared with traditional vehicles, the value of new energy vehicle thermal management pipeline is doubled. As an important subsystem of the thermal management system, the cooling pipeline will fully benefit from the global rapid volume of power batteries and energy storage batteries, and the simultaneous rise of volume and price is expected to open the second growth curve of the company.
The intelligent chassis business has made full efforts, with a cumulative fixed amount of more than 10 billion yuan in China. The “incremental track” continues to open the company’s growth space and drive the company’s performance valuation
In the last round of automobile industry cycle, the company reached a high profit in 2017, with a net profit attributable to the parent of 1.127 billion yuan and a net profit attributable to the parent of 493 million yuan in 2020. We expect the net profit attributable to the parent to reach 1.05 billion yuan in 2021. With the cyclical recovery of the automotive industry, repeated immunization against overseas epidemics and the promotion of the company’s intelligent chassis strategy, the company has ushered in a high-level performance inflection point. At present, the company’s basic business revenue (automobile sealing and shock-absorbing rubber) has ranked among the top 100 global parts. The cost advantage brought by large-scale, high-quality customer structure, and 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. So far, the intelligent chassis announced by the company has won a total of 10.186 billion yuan of fixed-point projects in China, including 5.343 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 growth space 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.
