This year, the Hong Kong stock market bullish feast opened, the Hang Seng Index rose more than 28%, hitting a new high. The Hong Kong stock market is the best performing market in the world during the same period, and the sectors such as the interior market and the automobile are more remarkable. Most of the bull market will be led by leading stocks, and the potential stocks will catch up. Take the auto sector as an example. One of the leading stocks, Geely Auto (175.HK), is particularly eye-catching this year, and its stock price continues to rise. The biggest increase is more than 2 times. Benefiting from the rising market of auto stocks, the auto parts industry has also ushered in a wave of rising opportunities.
Careful investors should not only find that following the good development trend of the automotive industry, some auto parts companies have exceeded their expectations in the interim results this year. Huazhong Vehicle (6830.HK) can be one of them. The company’s mid-term parent company should Profit and basic earnings per share increased significantly by 52.8% and 51.78%, respectively. The profitability has been greatly improved. In addition to Huazhong's efficient cost control measures, the company's cost has continued to decline, which is also attributed to the increase in profits of the joint venture company. According to company data, Huazhong has two joint ventures, Walter and Changchun Huazhong Yanfeng, the former is the integrated manufacturer of medium and high-end automotive interior non-woven fabrics, the latter is the design and development of automobile bumpers. The joint venture of the door and the door, the service customers are mainly FAW-Volkswagen, models include Audi A4/A6, Magotan, Golf, Q3 and so on. However, the author noticed that Huazhong also has a joint venture company, Ningbo Hualuote, which is a subsidiary of Hualeite. It is a joint venture between Huazhong, German Lecona and German Jupiter. It is a domestic high-end automotive interior. The supplier of fabrics, its new factory is located in Hangzhou Bay, Ningbo, and officially put into operation in October this year.
From the perspective of industry development, the growth rate of automotive interior fabrics is basically the same as that of the automotive industry. However, in China's automotive interior fabric market, the quality of suppliers is uneven, and the middle and low-end products are concentrated. Because of the high quality and standard requirements of the products, the decorative fabrics are relatively loose and the market potential is huge. Huazhong seized the opportunity to set up Hualuote with German shareholders to invest 150 million yuan to fill the gap in the domestic high-end automotive fabric market and establish a first-mover advantage. It is reported that Hualuote introduces a full set of advanced technology production technology from Germany, and has the leading high-end automotive fabric production capacity of warping, warp knitting, water washing stereotypes, dyeing, post-processing stereotypes, lamination, etc., with high degree of automation, which can effectively reduce the cost of the company. The main products include automotive interior pillar fabrics, ceiling fabrics, sun visor fabrics, coat rack fabrics and skylight fabrics. As the first supplier of domestically produced sunshade curtains in China, Hualuote has a strong competitive advantage and has a technical monopoly and market priority in the industry, and has already taken the lead in the industry.
In terms of customer base, Huazhong itself has become a stable partner with well-known domestic and foreign car companies, plus German Lecona and German Jupiter are the best fabric suppliers in Europe, such as Mercedes-Benz and Audi. Hualuote's qualifications have been highly recognized by customers, and it has become the interior fabric supplier of well-known OEMs such as FAW-Volkswagen, Audi, SAIC-GM, SAIC-Volkswagen, Changan Ford and Volvo. It is worth noting that the high-end automotive interior fabrics produced by Hualuote are expected to achieve a profit margin of more than 30% compared to the original products. The introduction of such high value-added products further optimizes the existing product structure of Huazhong and enhances it. Overall profitability. According to management's expectation, Hualuote's sales will exceed 500 million yuan by 2020, which can be pushed. The Hualuite joint venture alone will contribute more than 75 million yuan to Huazhong in 2020. Another Huazhong Yanfeng Pio can successfully turn a profit, Huale can continue to maintain a stable profit contribution, as well as the loss from the German FBZ mold company, the mold company in Germany's main customers Malebelle, Audi, The reputation of customers such as Porsche has been continuously improved and has achieved high growth. It is expected that the profit will increase further in 2017. These will lay a good foundation for the company's overall performance growth in the future and it is worth looking forward to.
The long-term trend of corporate stock prices is inseparable from the support of fundamentals. As the company's own profitability continues to improve, it also stimulates the stock's stock price up potential. Huazhong car itself has a good performance. From the development performance of the joint venture company, it can be seen that the company's endogenous growth momentum is strong. As a part of the automotive industry, the industry's good prospects can bring support to the company's business. Enhance space and have potential for development. In terms of valuation, Huazhong's 12-fold P/E ratio is lower than the industry average, and it is still at a low valuation. In summary, Huazhong is a potential stock. At present, although the stock price is hovering at 0.9 yuan, the trend is not as good as the industry's average increase. However, the trading volume in the past month has been significantly enlarged, and the center of gravity has gradually moved upwards, which has certain potential to “seek behindâ€. Leading stocks have taken the lead, and the next wave of rising stocks of such potential stocks is not far off.
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