Minsheng Securities Co., Ltd. Shao Jiang, Guo Yumeng, Zhang Yongqian recently conducted research on Zhongding Co., Ltd. and released a research report "2022 third quarter report performance review: 22Q3 performance exceeds expectations, smart chassis strategy is implemented at an accelerated pace". This report gave Zhongding Co., Ltd. buy rating, and the current stock price is 14.7 yuan.
Zhongding Co., Ltd. (000887)
Event Overview: On October 28, 2022, the company released its third quarter report for 2022. In Q1-Q3, the company achieved revenue of 10.259 billion yuan, a year-on-year increase of 9.84%; net profit attributable to shareholders was 750 million yuan, a year-on-year increase of -8.29%.
22Q3 Performance slightly exceeded expectations, and profitability continued to be restored. 22Q3, the company's revenue reached 3.685 billion yuan, up 24.64% year-on-year/ + 14.64% month-on-month; net profit attributable to shareholders reached 280 million yuan, up 23.25% year-on-year/month-on-month, up 27.39%. The growth rate of profit significantly exceeded the growth rate of global automobile sales (Marklines: Global automobile sales from July to September increased by 10.31% year-on-year). According to the subdivision, the company's gross profit margin in 22Q3 reached 22.55%, year-on-year -1.24pct/mo-month +1.90pct; net profit margin reached 7.55%, year-on-year -0.35pct/mo-month +0.77pct. The year-on-year decline was mainly due to the continued impact of the epidemic, which affected European factories' production capacity and the rising raw material prices, but the gross profit and net profit margin both rebounded on the previous month, and the profitability continued to recover. As the product sales scale of smart chassis systems grows, the company is expected to further dilute various costs such as R&D and capital expenditure, and the gross profit margin is expected to further increase. 22Q3 The company's three-fee expense rate reached 9.42%, a year-on-year -1.86pct, and its cost control capabilities were further enhanced. It is mainly due to the company's continuous promotion of the business unit system and accelerating global business integration. At the same time, the company promotes the implementation of optimization measures such as divestiture of non-core businesses, and the continuous optimization of various expense controls. The company's sales expenses/administrative expenses/R&D expense rates reached 3.05%/6.30%/4.71%, respectively, -0.25pct/-0.39pct/0.07pct year-on-year. The financial expense ratio reached 0.07%, year-on-year -1.23pct, mainly due to the decrease in interest expenses and the increase in exchange rate after converting convertible bonds into in 22Q3. Global business profitability continues to be restored, and the company's overall profit is expected to gradually increase.
smart chassis field continues to make efforts, and the dual drive of volume and price improves performance. The company's traditional main business (shock absorption, sealing) is stable, and it is based on the traditional main business. The value of bicycles has increased from several hundred yuan to tens of thousands of yuan (the value of bicycles with air suspension, lightweight and thermal management pipelines has increased by tens of thousands of yuan). The value of bicycles has increased significantly, which is expected to open up the company's growth space. The air suspension and pipeline business has been launched in China through early mergers and acquisitions, integrations and reverse implementation of global European companies, with strong business barriers and large room for cost reduction. In the future, as the company continues to "complease and strengthen" the industrial chain of related products, the company is expected to achieve import substitution and become the global leader in automotive electronic parts. The smart chassis strategy continues to advance: 1) Air suspension: The domestic production of air supply units is achieved based on AMK. It has now obtained orders from many leading domestic automakers, and the total output value of domestic orders has been obtained 6.894 billion yuan. At the same time, the company's air spring project has completed sample production, the layout of the air suspension assembly is accelerated, and the air suspension business is expected to accelerate the increase in volume and contribute core performance elasticity. 2) Chassis lightweight: Sun Company's Sichuan Wangjin Ball Head Hinge Assembly Technology is the world's leading. The company's lightweight chassis assembly products have obtained orders of 11.539 billion yuan from multiple OEM factories such as Mercedes-Benz , Changan , GAC, BYD , and have made breakthroughs in leading new energy companies. 3) Thermal management pipeline: Based on TFH, the company quickly masters the world's leading thermal management system assembly technology. It has currently obtained a total of 5.989 billion yuan in thermal management pipeline assembly orders from many car companies including Geely , Ideal, Xiaopeng , Leapmotor, etc. The smart chassis business is currently in hand with abundant orders, driving the company's performance and valuation "Davis Double-click".
Investment advice: It is expected that the company will achieve a net profit attributable to shareholders of RMB 1.184/1.392/1.559 billion in 2022-2024, and the current market value corresponds to a PE of 16/13/12 times from 2022 to 2024. We are optimistic that lightweight business will bring new growth space to the company's business development and maintain a "recommended" rating.
Risk warning: Risk of chip supply shortage; intensified industry competition leads to a decrease in gross profit margin, etc.
Securities Star Data Center calculates based on the research report data released in the past three years, CITIC Securities Researcher Li Zijun's team has conducted in-depth research on the stock, with the average prediction accuracy in the past three years as high as 97.43%. It predicts that the attributable net profit in 2022 will be 1.111 billion yuan, and the predicted PE based on the current price conversion is 17.5.
latest profit forecast details are as follows:
A total of 19 institutions in the stock have given ratings in the past 90 days, 16 buy ratings and 3 increase ratings; the average target price of institutions in the past 90 days was 22.87. According to the financial report data in the past five years, Securities Star valuation analysis tool shows that Zhongding Co., Ltd. (000887) has good competitiveness in the industry, average profitability and average revenue growth. There may be hidden financial concerns, and financial indicators that need to be paid attention to include: monetary funds/total asset ratio, interest-bearing debt-to-asset ratio , accounts receivable/profit ratio. The stock has a good company index of 2.5 stars, a good price index of 3 stars, and a comprehensive index of 2.5 stars. (Indicators are for reference only, indicator range: 0 ~ 5 stars, maximum 5 stars)
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