股 票 研 [Table_Title] Company Report: Nexteer (01316 HK) Toliver Ma 马守彰 究 (852) 2509 5317 Equity Research 公司报告： 耐世特 (01316 HK) [email protected] 1 March 2018 [Table_Summary] Steering towards a Bright Future, Initiate with “Accumulate” 驶向光明未来，首次给予“收集” Nexteer operates in manufacturing and selling of steering systems. The [Table_Rank] 公 Company has a strong presence in the US due to its long history with Rating: Accumulate Initial General Motors. The growing demand for high quality electric power steering 司 systems (“EPSS”) in China has helped the Company to break into the 报 评级： 收集 (首次覆盖) Chinese market. Its strong research capabilities and its partnership with 告 Continental AG has put the Company in a strong position in the next product cycle in the field of ADAS / AD. 6[Table_Price-18m TP 目标价] : HK$19.33 Company Report We expect Nexteer to deliver 7.8% revenue CAGR from 2016 to 2019. Top-line growth is mainly driven by stronger EPSS sales, and we expect Share price 股价: HK$17.440 China to remain as the fastest growing region in our forecasted period. We expect Nexteer to deliver CAGR of 17.9% from 2016 to 2019 for Stock performance shareholders’ profit. Besides revenue growth, we expect Nexteer to 股价表现 continue steady margin expansion due to the sales mix of advanced EPSS [Table_QuotePic] and effective cost control measures. 120.0 % of return We initiate with "Accumulate" investment rating for Nexteer, with TP of 100.0 HK$19.33, representing 17.5x 2017 PER, 14.9x 2018 PER, 4.6x 2017 PBR 证 80.0 and 3.7x 2018 PBR. Nexteer is focused on the steering market and is one of 券 告 the most profitable listed companies in its market globally; therefore we think 60.0 研 报 our valuation is reasonable. Our valuation is above its HK market peers, but 40.0 closer to the global peers’ average. 究 究 20.0 耐世特制造和销售转向系统。由于公司与通用汽车有着悠久的历史渊源，在美国业务占比 报 Research Report 0.0 研 大。随着中国对高品质电动助力转向系统(EPSS)的需求不断增长，有助于公司打入中国市 告 场。其强大的研究能力和与大陆集团(Continental)的合作使其在先进驾驶员辅助系统 (20.0) 券 Feb-17 May-17 Aug-17 Nov-17 Feb-18 自动驾驶 领域处于强势地位。 Equity (ADAS) / (AD) HSI Nexteer 证 我们预计耐世特 2016-2019 年收入复合年增长率为 7.8%。EPSS 销售额的强劲增长推动 [Tab 收入增长，预计中国仍将是我们预测期内增长最快的地区。 Change[Table_PriceChange] in Share Price 1 M 3 M 1 Y le_I 我们预计耐世特 2016-2019 年的股东净利润将实现 17.9%的复合增长率。 除收入增长外， 股价变动 1 个月 3 个月 1 年 汽 我们预计耐世特将继续保持稳定的利润率，主要由于其先进的 EPSS 销售组合和有效的成 nfo1 Abs. % 3.6 4.7 71.1 车 本控制。 绝对变动 % ] 及 Rel. % to HS Index 9.1 (1.4) 41.4 我们首次给予公司“收集”评级，目标价 19.33 港元，分别对应 17.5 倍 2017 年市盈率和 相对恒指变动 % 零 14.9 倍 2018 年市盈率，4.6 倍 2017 年市净率和 3.7 倍 2018 年市净率。耐世特专注转向 Avg. Share price(HK$) 16.8 17.6 14.1 平均股价（港元） 部 系统，是全球同业盈利最高的上市公司之一，因此我们认为我们的估值是合理的。我们的 Source: Bloomberg, Guotai Junan International. 件 估值比香港同业高，但与全球同业平均市盈率相当。 行 业 Automobiles & Components Sector Automobiles & Components Y[Table_ear End Turnover Net Profit EPS EPS PER BPS PBR DPS Yield ROE [Tab 年结Profit ] 收入 股东净利 每股净利 每股净利变动 市盈率 每股净资产 市净率 每股股息 股息率 净资产收益率 le_I 12/31 (US$ m) (US$ m) (US$) (△ %) (x) (US$) (x) (US$) (%) (%) 2015A 3,361 205 0.082 26.2 27.4 0.331 6.8 0.016 0.7 27.1 nfo2 2016A 3,842 295 0.118 43.9 19.1 0.424 5.3 0.024 1.1 31.3 中] 2017F 4,108 353 0.141 19.5 15.8 0.537 4.2 0.028 1.2 29.4 4,446 416 0.166 17.7 13.4 0.671 3.3 0.032 1.5 27.5 外 2018F 耐 2019F 4,814 483 0.193 16.3 11.5 0.827 2.7 0.038 1.7 25.8 运 世 [Table_BaseData]Shares in issue (m) 总股数 (m) 2,505.1 Major shareholder 大股东 PCM Holding 67.2% 特输 Market cap. (HK$ m) 市值 (HK$ m) 43,689.8 Free float (%) 自由流通比率 (%) 32.8 3 month average vol. 3 个月平均成交股数 (‘000) 6,189.3 FY18 Net gearing (%) FY18 净负债/股东资金 (%) Net cash 52 Weeks high/low (HK$) 52 周高/低 (HK$) 20.400 / 9.800 FY18 Est. NAV (HK$) FY18 每股估值（港元） 23.2 Nexteer HK) (01316 Source: the Company, Guotai Junan International. See the last page for disclaimer Page 1 of 21 [Table_PageHeader] Nexteer (01316 HK) ] 1 r a M t h g i R _ e l b a T [ Table of Contents Automobile Industry Overview ............................................................................................... 3 2018 China Automobile Market .................................................................................................. 3 US Automobile Market ...................................................................................................... 4 1 March Steering Market Overivew ...................................................................................................... 5 Market dynamic ................................................................................................................. 5 Analysis of Nexteer Under Porter’s Five Forces ............................................................... 6 The Next Technological Upgrade ...................................................................................... 7 Peers Comparison .......................................................................................................... 10 ] 2 r a M t h g i R _ e l b a T [ Company Analysis ............................................................................................................... 10 Backlog Analysis ............................................................................................................. 12 Financial Analysis ........................................................................................................... 13 Investment Thesis, Valuation and Risk ................................................................................ 18 Financial Statements and Ratios ......................................................................................... 20 (01316 HK) 耐世特 Nexteer Report Company See the last page for disclaimer Page 2 of 21 [Table_PageHeader] Nexteer (01316 HK) Automobile Industry Overview ] 1 r a M t h g i R _ e l b a T [ A stable global automobile industry is expected. According to PricewaterhouseCoopers (“PWC”), global production volume in the automobile industry grew from 56 million units in 2003 to 93 million units in 2016. PWC expects global production volume to 2018 rise to 112 million units in 2023, representing a CAGR of 2.8% during 2017 to 2023. The primary driver of future growth is largely derived from the Asia Pacific region with China being one of the largest contributors. We believe that the strong growth has stemmed from a stronger economic outlook of the Asia Pacific region, which has remained robust and the strongest region 1 March globally in 2017, according to the IMF. In most Southeast Asian economies, growth is expected to accelerate somewhat, supported by robust domestic demand which is an important driver of growth in these countries. Moreover, automobile manufacturers have continued to shift their production facilities from high-cost regions, such as North America and Europe, to lower-cost regions, such as China and Southeast Asia. Figure-1: Global Vehicle Sales by Country Figure-2: Global Production Volume and Forecast Units (million) 2014 2015 2016 2017 Units (million) 2017-2023 CAGR: 2.8% 30 120 25 100 ] 2 r a M t h g i R _ e l b a T [ 20 80 15 60 10 40 5 20 0 0 USA Italy Brazil China Korea Japan 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Canada Australia 2017F 2018F 2019F 2020F 2021F 2022F 2023F Germany Source: CAAM, WIND, Guotai Junan International. Source: PWC, Guotai Junan International. China Automobile Market A transition year in 2017. According to China Association of Automobile Manufacturers (“CAAM”), China vehicle sales grew 3.0% yoy in 2017, and was significantly lower than the three year high of 13.7% in 2016. In particular, sales growth of passenger (01316 HK) vehicles (“PV”) showed a larger reduction due to the scale down of purchase tax cut in 2017. In 2017, PV sales was up 1.4% yoy, 耐世特 but was 13.7 ppts lower than in 2016. In terms of vehicle type, SUVs continued to be the driver of the overall PV market, recording 13.3% yoy growth in 2017, while sedans stayed rather flat at -2.5% yoy growth; both MPVs and crossovers were down by a larger magnitude of 17.5% yoy and 20.0% yoy, respectively. In contrast, commercial vehicles (“CV”) sales was far better Nexteer than PV sales, up 14.0% in 2017, mainly driven by better heavy-duty truck (“HDT”) sales. Figure-3: China Vehicle Sales and Sales Growth Figure-4: Sales Growth of Different Types of PVs Overall vehicle yoy Units Sedan MPV SUV Crossover 80% 35,000,000 45.5% 50% 45% 30,000,000 60% 40% 32.5% 25,000,000 35% 40% 24.8% 30% 20,000,000 22.3% 25% 20% 15,000,000 13.9% 13.7% 20% 0% 10,000,000 15% 15 16 17 15 15 16 16 17 17 15 15 16 17 17 14 16 15 17 16 - - 6.8% - - - - - - - - - - - - - - - - 6.6% - 4.2% 4.6% 10% 5,000,000 2.7% 3.0% -20% Apr Apr Apr Oct Oct Oct Jun Jun Jun Feb Feb Feb Aug Aug Aug Dec Dec Dec 5% Dec - 0% -40% Report 2006 2007 2008 2009 2012 2013 2014 2015 2016 2017 2011 2010 -60% Source: CAAM, Guotai Junan International. Source: CAAM, Guotai Junan International. Company See the last page for disclaimer Page 3 of 21 [Table_PageHeader] Nexteer (01316 HK) We forecast single-digit growth in 2017 onwards. We forecast overall automobile market growth to further decrease in the next few years. Without any stimulus policy, the vehicle market will maintain single-digit growth.] 1 r a ThisM ist becauseh g i R 1)_ sincee l 2011,b a T [ the vehicle market has already been growing at a much slower pace due to a saturating market. Japan’s and South Korea’s vehicle market became saturated upon surpassing 84 units and 63 units of vehicle ownership per one thousand inhabitants, respectively. China reached that level in 2011 and data from previous years has proven that China’s vehicle market will grow in a 2018 more steady manner; 2) vehicle sales growth is highly correlated with economy growth. We think that vehicle sales growth will follow the overall trend in China’s economy in the next few years, which will exhibit a stable and moderate growth trend; and 3) this year, as history revealed in 2010, the scaling down of purchase tax subsidy would result in slower sales growth which is 1 March consistent to the current trend.