On Wednesday, Jefferies, a global investment banking firm, initiated coverage on shares of Ningbo Tuopu Group Co Ltd (601689:CH), a leading supplier in the automotive components industry, with a Buy rating and a price target of RMB72.50.
The firm's analyst cited the company's successful evolution from a Noise, Vibration, and Harshness (NVH) supplier to a tier-0.5 supplier with a broad range of automotive components as a key factor in their positive outlook.
The analyst highlighted Ningbo Tuopu's strategic vision and strategy under management's guidance as pivotal in driving the company's growth. The expanding client base, including notable names such as Tesla (NASDAQ:TSLA), BYD (SZ:002594), Li Auto (NASDAQ:LI), and AITO, along with the increased content value per vehicle, which has risen from RMB1k to RMB20k, were identified as strong supports for Tuopu's future growth prospects.
Jefferies projects a Compound Annual Growth Rate (CAGR) of 23% for Ningbo Tuopu's top-line and 24% for the bottom-line over the period from 2024 to 2026. This optimistic forecast is based on the company's historical performance and expected future developments.
In addition to its stronghold in the automotive industry, Ningbo Tuopu is also branching out into the humanoid robot industry, which Jefferies expects to be another significant growth driver for the company. This move leverages the company's established moat in the auto industry and signals its potential to capitalize on emerging technological markets.
The stock price target of RMB72.50 is grounded on a 32x 2025 estimated Price-to-Earnings ratio, which aligns with the five-year average for the company. This valuation reflects the firm's confidence in Ningbo Tuopu's ability to maintain its growth trajectory and expand its market presence in the coming years.
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