Baolong Automotive(SH:603197) Huajin Securities·2024-10-31 00:03Investment Rating - The report assigns an investment rating of AA/AA to the company and its convertible bond issuance [6][7]. Core Insights - The company is one of the largest suppliers of exhaust system components and valve stems globally, with a focus on automotive smart and lightweight products [18]. - The convertible bond issuance is sized at 1.39 billion yuan with a maturity of 6 years, featuring a conversion price of 40.11 yuan and a compensation interest rate of 8%, indicating a high level of return [6][7]. - The company's stock price has decreased by 29.38% year-to-date as of October 29, 2024, underperforming the industry index which declined by 12.12% [6]. - The company has a diluted total share capital rate of 14.05% and a diluted circulating share capital rate of 14.09%, indicating some dilution pressure [6][7]. Summary by Sections Convertible Bond Analysis - The bond's pure debt value is calculated at 95.9 yuan, with a corresponding yield to maturity (YTM) of 2.16%, providing sufficient debt protection [6]. - The expected subscription rate is approximately 0.0067% based on recent market conditions and subscription limits [10]. Company Overview - The company is controlled by Chen Hongling, Zhang Zuqiu, and Song Jin, with a significant portion of shares pledged, indicating potential equity pledge risks [11]. - The company specializes in automotive components, including TPMS, sensors, ADAS products, and air suspension systems, with TPMS and metal components being core products [11][12]. Industry Analysis - The automotive parts industry is closely linked to the automotive supply chain, with a competitive landscape that includes various levels of suppliers [16]. - The company has established a strong market position in TPMS, exhaust system components, and valve stems, with significant global market shares [16][18]. Financial Analysis - For the first half of 2024, the company reported revenues of 3.184 billion yuan, a year-on-year increase of 21.68%, while net profit decreased by 19.40% due to increased stock incentive costs and R&D investments [34]. - The company has experienced steady growth in its main business revenue, driven by traditional and new business segments [34].