China Merchants Securities: Huayu Auto's steady growth

Huayu Automobile Company achieved operating revenue of 52.3 billion yuan (+16.7%) in 2011, and was attributable to the parent company's net profit of 29.9 (+17%).

The overall growth rate is stable. With the release of new production capacity, the company's performance will continue to grow steadily. Control of subordinate enterprises will be gradually strengthened, which will help companies accumulate autonomous knowledge and technology. The company's PE and PB for the 12 years were 7.1 and 1.4, respectively, and the “Prudent recommended-A” investment rating was maintained.

The growth rate has narrowed and growth continues to exceed the industry. The company's revenue and profit growth continued to exceed the overall growth rate of the downstream passenger vehicle industry, mainly due to the rapid growth in sales of downstream joint venture brands. However, from the year-on-year and quarter-to-quarter comparisons, the growth rate has narrowed, mainly due to the slowdown in the growth of the passenger vehicle industry in China. It is expected that the self-owned brand will receive a slight improvement in the country's support for sales, which will partially eliminate the negative impact of the company's performance.

The construction project was gradually transferred and began to release its performance. The company's 11-year increase in fixed assets was 18%, reaching a record high, mainly to cope with the transfer of production bases of auto plants. New projects such as the construction of new plants and capacity expansion were gradually completed. It will begin to gradually release its performance, and it is expected that the central release will take place until the mid-to-late 12 years to provide guarantee for the growth of this year's performance. With the gradual shift of production bases of vehicle manufacturers to the central and western regions, the company’s future projects under construction and fixed assets will continue to grow rapidly.

Gradually strengthen the control of subsidiary subsidiaries. Following Yanfeng Visteon, the company increased the capital of Secco during the year, obtained control of Sanke Bellow and incorporated it into the consolidated financial statements. The controlling power of its affiliated companies has been gradually strengthened, the right to speak has become increasingly significant, and its investment in R&D expenditure has also steadily increased. The direction is mainly based on batteries, new energy, thermoforming function optimization, global platform technology research, and automotive electronics. It is expected that the company’s transformation to an autonomous knowledge accessory company is accelerating.

Maintain “prudent recommendation-A” investment rating: It is expected that the company will continue to be a large-scale investment company in the next 2-3 years. The gradual contribution of the initial investment will ensure the steady growth of the company's performance, and the amount of accessories for independent intellectual property rights is an important aspect. It is expected that The control of subordinate enterprises continued to strengthen, and the company’s transition from management-oriented enterprises to R&D and production-oriented enterprises accelerated. Estimated earnings per share of 1.38 yuan in 2012 and 1.61 yuan in 13 years, corresponding to 12 years of PE, PB were 7.1, 1.4, maintain "prudent recommendation -A" investment rating; Risk warning: sales of passenger cars sluggish, raw material costs rise.