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The Oil Control Valve (OCV) is a a critical part used in every engine that is fitted with variable valve technology (VVT). A single control valve will regulate the supply of oil to a designated VVT hub, to advance or retard the timing by altering the camshaft angle position. Controlled by the ECU, the OCV receives electrical signals, instructing it to adjust the oil flow as required, in accordance to current driving conditions.
Torch: Fest revalued 9.37 billion yuan
The ongoing strength in real estate and commercial stocks is largely driven by the revaluation of underlying assets. As a result, identifying undervalued stocks with significant potential for value recovery has become a key strategy for investors. One such example is Hunan Torch (000549), which holds a 51% stake in Shaanxi Fast, a company whose revaluation value reached an impressive 9.37 billion yuan. However, the current market value of Hunan Torch is only around 3.1 billion yuan, which is far below the estimated value of its subsidiary. This discrepancy explains why Weichai Power entered the stock at 3.887 yuan per share, highlighting that the stock is currently trading at a substantial discount.
According to available data, Shaanxi Fast is China's largest producer of heavy-duty transmissions and a major exporter of gears. In 2005, it generated sales revenue of 2 billion yuan and earned 45.11 million U.S. dollars in export earnings. Its performance in output, sales, foreign exchange, and profits consistently placed it at the top of the national gear industry. Some analysts believe its profitability may even surpass that of Weichai Power. Given this, a professional valuation estimated the revaluation of Shaanxi Fast at 9.37 billion yuan, meaning the value of Hunan Torch’s 51% stake could be as high as 4.778 billion yuan. With the latest closing price at just 3.31 yuan, the total market cap before the stock split was only 3.1 billion yuan — significantly lower than the revaluation value of its key subsidiary.
Hunan Torch holds four major assets: Shaanxi Heavy Duty Truck, Shaanxi Fast, Zhuzhou Spark Plug, and Dongfeng SUV. Among these, Shaanxi Fast, Shaanxi Zhongqi, and the spark plug division have emerged as industry leaders with strong market influence. Controlling Hunan Torch essentially means controlling some of the most profitable heavy truck parts assets in China. That’s why Weichai Power invested over a billion yuan — equivalent to 3.887 yuan per share — to acquire a stake in the company.
Currently, the stock trades at 3.31 yuan, below the 3.887 yuan cost paid by Weichai Power. If an institutional investor were to acquire the outstanding shares at this level, they could maintain a major shareholder position while benefiting from the upcoming share reform. The acquisition cost would likely be even lower, making this a compelling opportunity for long-term investors.
With a market value of just 3.1 billion yuan, Hunan Torch is trading well below the revalued assets of its subsidiary, Shaanxi Fast. The stock is undervalued compared to its core holdings, which include some of the most profitable heavy truck components in China. As a result, it has become a target for major players in the automotive industry. Given its underappreciated value and strong fundamentals, Hunan Torch is poised for future growth and deserves attention from mid-sized investors.
Related topics: Shaanxi Fast - Global Heavy-Duty Transmission Production and Sales