LONCIN(SH:603766) Xin Lang Cai Jing·2025-07-02 02:26Core Viewpoint - The company is initiating coverage on Longxin General with a "Buy" rating and a target price of 18.40 yuan, corresponding to a 20x PE for 2025, highlighting its strategic shift from low-end OEM to self-owned mid-to-high-end brands [1] Group 1: Company Strategy and Market Position - Longxin has transformed its business model, with the "Wujie" brand contributing nearly 20% of revenue by 2024, enhancing pricing power and value chain positioning in the motorcycle business [1] - The acquisition of a controlling stake by Zongshen in 2024 is expected to create the largest motorcycle manufacturer in the industry, with a projected market share of 17% [1] - The complementary product lines and platforms of Longxin and Zongshen are anticipated to generate strong synergies, further boosting growth potential [1] Group 2: Market Demand and Product Performance - The demand for large-displacement motorcycles is rising, with domestic sales expected to increase by 20% year-on-year to 396,000 units in 2024, raising the market share of large-displacement motorcycles to 8.6% [2] - Longxin's "Wujie" brand has successfully captured market opportunities, launching competitive products like CU525, which has helped increase its market share to 14% in 2024 [2] - The company is projected to increase its market share to 16.2% within three years, with expected sales growth of 15%/10%/9% from 2025 to 2027 [2] Group 3: Export Growth and Future Prospects - The export business of "Wujie" is thriving, with a compound annual growth rate (CAGR) of 71% over the past four years, driven by partnerships with quality local agents and differentiated product offerings [3] - Europe and Latin America are identified as key growth regions, with expectations to capture 5% market share in Europe by 2027 and 2% in Latin America within three years [3] - The company anticipates maintaining a robust total sales growth rate of nearly 40% from 2025 to 2027 [4] Group 4: Financial Forecast and Valuation - Revenue is projected to grow by 15.3%/17.6%/18.4% from 2025 to 2027, with net profit expected to increase by 69%/24%/21%, reaching 1.90 billion, 2.36 billion, and 2.85 billion yuan respectively [6] - The average PE for comparable companies is estimated at 20x for 2025, leading to a target price of 18.40 yuan for Longxin [6] Group 5: Market Concerns and Growth Potential - Despite market concerns about saturation in the domestic large-displacement motorcycle sector, there remains significant growth potential compared to markets like Italy, Japan, and Brazil [5] - The company plans to expand its product offerings to fill gaps in engine platforms and segmented categories, which could further enhance its domestic market share [5]