Yinlun Shares (002126) Important Events Comments: New orders secured growth

Yinlun Shares (002126) Important Events Comments: New orders secured growth
The company won another large order from GM Thermal Management and entered the Japanese passenger car supply chain.We believe that the short-term heavy 成都桑拿网 truck EGR explosion and the release of new energy thermal management orders will accelerate from 2021, which will benefit the global replacement of thermal management in the long run.The company’s 2020 performance is expected to double up. It will continue to focus on recommendation and maintain a “Buy” rating.   On January 5th, the company announced that it had been appointed by SAIC-GM and Dongfeng Nissan suppliers, so we commented as follows: New orders for passenger car thermal management were obtained, and long-term growth was guaranteed.The company has obtained SAIC General Water Cooler Authorized Order 2 this time.USD 5.0 billion, expected to be supplied from October 2023. The life cycle is 6 years. The company has gradually announced that it has obtained GM (including GM, SAIC GM) water air coolers, and orders for water cooling plates have reached 13.900 million; At the same time, Dongfeng Nissan oil cooler was obtained.The US $ 2.4 billion order, expected to be supplied in July 2020, is the company’s first entry into the Japanese passenger car supply chain.Yinlun shares are replacing overseas giants such as Modin in the global thermal management field. At the same time, we count the company’s new energy thermal management orders in hand. It is estimated that the annualized revenue will exceed $ 1 billion. The substantial orders in hand will help ensure the company’s long-term stable growth. Currently: Company profitability is at the bottom of history.The company’s gross profit margins for Q1 / Q2 / Q3 in 2019 were 24.9% / 23.7% / 23.4%, a month-on-month decrease, and Q3 single-quarter gross profit margin is close to the lowest in the past six years.In Q1 / Q2 / Q3, the net profit margin of non-attributed mothers will be 5, respectively.5% / 4.8% / 2.0%, a month-on-month decrease, and the net profit attributable to the parent in Q3 was the lowest in six years.The company’s ROE in the first three quarters of 2019 only accounts for 4%, which is far lower than the historical value of the past six years.Regardless of short-term or long-term perspective, the company’s profitability is in the historical bottom range.   Outlook: It is expected that the fourth quarter of 2019 will be the turning point of profit, and gradually stabilize and pick up in 2020.The company’s downstream customers include commercial vehicle, passenger vehicle, and construction machinery manufacturers.In the short term, in July 2019, natural gas heavy trucks implemented the National Sixth emission standard, and the demand for EGR (exhaust gas recirculation) systems broke out. From January 2021, diesel heavy trucks further implemented the National Sixth standard, and EGR demand continued to increase.The company surpassed its more than 60% share in the heavy truck EGR market and is expected to benefit directly.In addition, passenger car EGR will begin to be applied in batches from 2020, which is expected to increase the company’s performance.In the medium to long term, the company will accelerate the release of new energy thermal management orders starting in 2021. At the same time, the company will actively expand its overseas market around thermal management. It is expected that it will continue to enjoy the growth dividends of electrification and global substitution.   Continue share repurchases, demonstrating confidence in development.Following the completion of the repurchase on December 5, 2018, the company announced in November 2019 that it intends to use no more than 9.The price of 0 yuan / share repurchase 0.5-1.0 billion (9.Calculated at 0 yuan / share repurchase 10,000 yuan, accounting for about 1 share capital.4%) of stock, demonstrating the company’s long-term development confidence; the termination of January 3, 2020, the company has gradually increased to 7.36 yuan / share average price repurchase 6.79 million shares (0% of total share capital).86%).   Risk factors: Sales of major downstream passenger car customers are not up to expectations; new product development is not up to expectations; raw material prices 杭州桑拿 fluctuate.   Investment Advice.Maintain 2019 EPS forecast of 0.41/0.49/0.61 yuan.In the short term, the passenger car business stabilized, and the exhaust aftertreatment EGR business broke out.In the medium and long term, new energy thermal management benefits from downstream demand growth, while actively expanding global business.The recent repurchase also shows confidence.In general, we are very optimistic about the company’s growth. The current valuation corresponds to only 17 times PE in 2020 and 25 times PE in 2020, corresponding to a target price of 12.00 yuan, key recommendation, maintain “Buy” rating.