The company designs the “chief engineer” & equipment manufacturer for the grain, oil, and cold chain fields. The company is a comprehensive design enterprise and engineering contractor that provides services for engineering and construction projects in the wheat, rice, grease, corn and food industry, agricultural product storage industry, cold chain storage logistics and other industries. It is also a leading manufacturer in the grain and oil equipment industry, providing customers with specialized high-quality full-process services such as pre-project consulting, planning, design, engineering contracting, system delivery, and equipment manufacturing.
A leader in mechanical and electrical design for grain and oil storage, with a rich product matrix for the related equipment business. The company relies on subsidiaries such as Wuxi Engineering, Zhengzhou Scientific Research, Wuhan Scientific Research, and Xi'an International to carry out grain and oil engineering business, and the company has also formed a rich and comprehensive product matrix in related equipment manufacturing. In recent years, there has been a trend of consumption upgrading in the grain and oil industry, and processing enterprises have a large number of production line upgrades and other needs. In the process of eliminating backward production capacity and increasing industry concentration, grain and oil processing enterprises (especially leading enterprises) have large plant expansion needs and production line efficiency improvements, providing business opportunities for grain and oil processing engineering services and grain and oil machinery manufacturers.
The “14th Five-Year Plan” of cold chain logistics opened up market space, and the snow and ice business ushered in new opportunities. In terms of cold chain business, according to data from the China IoT Cold Chain Commission, China's cold chain logistics market in 2021 was 41.17 billion yuan, an increase of 10.40% over the previous year. With the introduction of the “14th Five-Year Plan” for the cold chain logistics industry, the size of China's cold chain logistics market will increase rapidly, bringing major opportunities to the company's cold chain business. In the snow and ice business, the company undertook the design of core projects for the Winter Olympics represented by the National Speed Skating Hall, the National Bobsleigh Center, and the Alpine Skiing Center. After the Winter Olympics were held, under the impetus of relevant policies, the construction of domestic snow and ice sports facilities and the development of snow and ice engineering accelerated, and the company is expected to find new growth points.
Investment advice: The company's net profit for 22-24 is estimated to be 2.4/35/50 billion yuan respectively, and the company's average annual profit growth rate for the next 3 years is about 46%. Considering the gradual increase in the share of the company's design and manufacturing business, according to the company's own growth rate and future market size, the company is given 1 times the PEG valuation for the next three years. The corresponding PE is 46 times, while the company's EPS in '22 is about 0.47 yuan/share, a reasonable value of 21.59 yuan/share, covering the “buy” rating for the first time.
Risk warning: macroeconomic risks; risks of declining profitability due to increased competition in the industry, etc.