Wolong Electric Drive (600580): Performance Forecast Meets Expectations Joint Venture with Zairev Opens Global New Energy Vehicle Motor Supply
Forecasted earnings growth of 53 per year.
58% Wolong Electric Drive announced the announcement of 2019 annual results pre-increasing, and the company expects to return to its mother net profit in 20199.
7.8 billion, an increase of 53.
58%, deducting non-net profit 7.
01 trillion, with the same 都市夜网 increase of 19.
In line with our expectations (CICC expects 2019 profit of 9.
Among them 4Q19 profit 1.
67 ppm, a decrease of 13%, non-net profit 1 deducted in 19Q4.
5.4 billion, an increase of 5%.
Attention points Joint venture with Zeev to introduce overseas new energy vehicle motor supply system to benefit high global growth.
ZF is the world’s leading supplier of traditional automotive systems. It is also one of the few companies in the world that has developed a three-in-one electric drive axle system.
Wolong received Zeev on June 10, 2019, 22nd 2020-2026.
A fixed point of 500 million U.S. dollars, and a joint venture with Zeev on November 18, 2019. The company holds 74% of the shares and is included in the joint investment1.
600 million euros.
We believe that: 1) Few domestic companies have strong competition in the motor business but have the ability to enter the supply system of overseas auto companies. Wolong’s entry into ZF Motor’s supply chain can prove that the quality of its motors and related parts and components has reached international first-line standards.
2) We expect that European car companies will accelerate their electrification driven by carbon emission policies, driving high growth of European and domestic joint venture car companies.
ZF’s traditional downstream customers include front-line car companies such as BMW, Volkswagen, and Mercedes-Benz. Under the joint venture and cooperation, the company benefits from the dual-drive growth of the industry and ZF’s downstream customers.
The easing of trade frictions favors low-voltage motors, and the boom in oil and gas investment continues to favor high-voltage motors.
The company’s overseas sales accounted for nearly 40% in 2018. We expect the trade friction to ease and the growth of traditional low-voltage motors to pick up.
The CICC Oil and Gas Group expects that capital expenditures for oil and gas exploration and development will continue to increase in 2020. We expect that the high-voltage motor business, which has a high contribution to current profit growth, is expected to bring downstream prosperity and sustained high growth.
Estimates and recommendations We maintain 9/2020/2021.
6.7 billion profit is expected, of which we expect non-profit deduction of 8 in 2020/2021.
90,000 yuan, an increase of 19 in ten years.
6% / 17.
We believe that in the short term performance perspective, the company benefits from the easing of trade friction and the downstream boom of high-voltage motors. In the medium and long term, new energy vehicle motors benefit from the growth of global new energy vehicles and the introduction of high-quality customers.
The company currently expects to correspond to 2020 / 2021e18 / 15x P / E, and the estimated level in 西安耍耍网 the new energy vehicle industry chain companies is relatively long.
We maintain the company’s target price of 15 yuan, corresponding to 2020 / 2021e 21 / 18x P / E, and maintain an outperform industry rating with 20.
Risks Lower-end capital expenditures of high-voltage motors were lower than expected, and actual demand for EV motor customers was lower than expected.