WZ Group(SH:600704) Tianfeng Securities·2025-05-14 15:22Investment Rating - The report assigns a "Buy" rating for Wuchan Zhongda with a target price of 6.41 CNY, based on expected growth in manufacturing and stabilization in supply chain business [5]. Core Views - Wuchan Zhongda's manufacturing business is expected to grow significantly, with an annualized growth rate of 26% from 2016 to 2024, driven by investments exceeding 6 billion CNY and acquisitions over 11 billion CNY [1][45]. - The supply chain business has seen a rise in market share from 0.5% in 2014 to 1.3% in 2024, although it faced a decline in gross profit by 30% due to falling commodity prices [2][3]. - The overall profitability of Wuchan Zhongda is anticipated to improve as the contribution from manufacturing increases, potentially leading to a higher profit growth center [3][4]. Summary by Sections Manufacturing Business - The manufacturing segment is projected to achieve a 26% annualized growth rate in revenue and gross profit from 2016 to 2024, with significant contributions from cable and tire businesses [1][45]. - Wuchan Zhongda plans to enhance its manufacturing capabilities through substantial investments and strategic acquisitions, aiming for a second growth curve [1][45]. Supply Chain Business - The supply chain business is expected to stabilize as commodity prices recover, with a projected gross profit decline of 30% and total profit decline of 35% from 2022 to 2024 [2][3]. - The company’s market share in the supply chain sector is on an upward trend, with core product sales continuing to grow [2][3]. Profit Forecast and Target Price - The forecast for net profit attributable to the parent company is 3.33 billion CNY for 2025, reflecting an 8% year-on-year growth, with further increases expected in subsequent years [4]. - The target price of 6.41 CNY corresponds to a price-to-earnings ratio of 10, considering the anticipated rapid growth in profitability [4].