Galaxy Securities released the crankshaft research report on February 8. The summary of the report is as follows:

Investing points:

The main heavy truck crankshaft benefits from the recovery of heavy trucks, and is expected to participate in global competition: the company ranks first in the field of heavy truck crankshafts in China and third in the world. In the past two years, the overall steady growth and rapid export growth are expected to participate in global competition in the future, and the international market aims at Thyssenk rupp. The domestic market share is more than 50%, gradually widening the gap with competitors. Benefiting from the continuous recovery of heavy truck sales in the second half of 2016, the company's heavy truck crankshaft orders increased significantly year-on-year.

The Euro 5 standard provides important opportunities for light trucks and passenger car crankshafts and connecting rods: the company vigorously expands the passenger car crankshaft market. The development of Euro 5 and Euro 6 standards puts forward higher precision and performance requirements for crankshafts and connecting rods, providing the company with Important opportunities. At present, orders for high-end crankshafts and connecting rods for light trucks and passenger cars have grown significantly, and production capacity is saturated. We expect the new light truck crankshaft production line to start production in March 2017, and the new passenger car crankshaft production line to start production in June 2017. The gross profit margin of light trucks and passenger car crankshafts is about 4-5pct lower than that of trucks, but the market space is much larger than that of heavy trucks. The company's products currently account for about 1% of the passenger car market, and the products are supplied to SAIC KV6-2.5L and Haima 474Q-C , jeep tiger shark, etc.

The company plans to acquire 100% equity of Dongguan Hongtu for 770 million yuan, and enter into the lightweight of automobiles: Dongguan Hongtu is mainly engaged in automotive aluminum alloy die-casting parts, and promises that the net profit realized in 2016-2018 will not be less than 60 million yuan, 75 million yuan, and 9900 yuan respectively. million. In the future, the goal is to build a R&D and manufacturing base for power system components, and further extension and mergers and acquisitions cannot be ruled out.

Cooperate with SIASUN to realize intelligent manufacturing: The company has a high degree of factory automation. In November 2016, it signed a "Strategic Partnership Agreement" with SIASUN Robotics, and plans to carry out all-round cooperation to build a digital factory. In terms of management system, the company independently developed the industry's advanced TRPS management system, covering the management system requirements of downstream domestic and foreign customers.

Profit forecast and investment suggestion: The company's endogenous downstream recovery and market diversification promote rapid growth; the extension layout of the vehicle is lightweight, and the goal is to build an international advanced power system components research and development base. We expect the pro forma EPS for 2016-2018 to be 0.20/0.25/0.29 yuan, corresponding to a PE of 37/29/25, the first coverage, and a "recommended" rating.

Risk warning: M&A failure risk, the heavy truck market is less than overdue, and new market expansion is not smooth