Per AI Express, on December 22, 2023, China Merchants ** released a research report commenting on Guansheng shares (605088).
The company is a pioneer in the automotive aftermarket, focusing on chassis parts, with a sales network all over the world, benefiting from the long-term growth of overseas markets and the release of domestic aftermarket potential. Optimistic about the company's triple growth momentum based on category expansion + platform transformation + channel sinking. The first coverage gives an "overweight" rating.
Deeply cultivate the overseas aftermarket, focusing on chassis parts. The company has been deeply involved in the overseas aftermarket for more than 20 years, focusing on chassis parts, with sales covering more than 120 countries and regions around the world, and realizing localized distribution in many countriesThe ODM+OBM model goes hand in hand, and its own GSP brand penetrates into the overseas market. In 2022, overseas revenue will account for 91%, Europe, Asia, Africa and North America will account for 41%, 19% and 17% respectively. The company covers six major product matrix: transmission shaft assembly, hub bearing unit, constant velocity universal joint, rubber shock absorption, steering suspension steering and shock absorber, with a complete range of SKUs, basically realizing full coverage of mainstream models.
Aftermarket industry: the European and American markets have long slopes and thick snow, and the domestic potential is huge. The automotive aftermarket is vast, and McKinsey expects the global market size to reach 12 trillion euros. 1) Europe and the United States: Taking the United States as an example, the aftermarket has a high degree of maturity and has grown steadily all year round. According to AASA's estimates, the U.S. light vehicle parts aftermarket will exceed $400 billion in 2024, with a CAGR of nearly 6% by 2026. Thanks to the long slopes and heavy snow in the aftermarket, the United States gave birth to autozone, o'reilly and other long **. 2) Domestic: the growth of ownership + the growth of average vehicle age resonance, China's automotive aftermarket has huge potential, and it is expected that the size of China's automobile maintenance market will increase from 0 in 2023-279 trillion to 13 trillion, CAGR of 9%. Structurally, the proportion of non-original factory maintenance is expected to increase from 44% in 2021 to 58% in 2026.
Growth momentum: category expansion + platform transformation + channel sinking. 1) Category expansion: Among the six categories of the company's products, the first three categories are the company's traditional main business, mainly self-made;The latter three categories and others are all newly expanded categories that rely on external procurement. The new category was a key growth engine with a revenue CAGR of 29% in 2017-22. According to **, the global market size of TOP 50 Class II wearing parts is about 500 billion US dollars, and the space is broad. 2) Platformization: Use the company's channels and brands to empower the domestic high-quality ** chain. At present, the company's self-made products account for about 70%, and will continue to decline in the future, with the goal of reducing to 50% in the next few years, and the long-term goal is to become an asset-light brand. 3) Channel sinking: Traditional multi-level distribution leads to layer upon layer price increases, so channel sinking will increase gross profit margin;The company has completed the sinking in North America and started the layout in Mexico, aiming to establish a warehouse network and achieve local distribution in the top 20 countries in the world in terms of car ownership in the next 3-5 years.
The first coverage gives an "overweight" rating. The company has a perfect global layout, brand channel barriers + asset-light strategy is scarce in China, and is optimistic that the company will achieve long-term growth in the high-quality track, and the asset-light + channel sinking will increase the gross profit margin. The net profit for 2023-25e is expected to be 2800 million 30 billion 3600 million yuan, +19% year-on-year 5% 21%, corresponding to 133x/12.7x/10.5x p/e。The first coverage gives an "overweight" rating.
Risk warning: exchange rate fluctuations, overseas demand fluctuations, raw material fluctuations, and poor digestion of new production capacity.
*: Huibo Investment Research).
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Edited by Tsang Kin-fai).
National Business Daily.