Purpose of the research:
Recently, we conducted a survey of Taiyuan heavy Industry and communicated with the company's leadership on future business plans and development strategies.
Main points of investment:
Star in the manufacture of high-end equipment
The company is one of the most famous heavy machinery and equipment manufacturers in China. China's largest lifting equipment production base, the largest excavation equipment production base, the largest space launcher production base, the largest large rolling mill oil film bearing production base, the most complete variety of domestic forging equipment production base. The company's products are widely used in metallurgy, mining, hydropower, thermal power, nuclear power, energy, transportation, aviation, aerospace, chemical, railway, shipbuilding, environmental protection, transportation equipment and other industries, machinery products are exported to more than 20 countries and regions.
In 2011, the company's revenue broke through the 10 billion mark, and the proportion of revenue from mining coking equipment, crane equipment, rolling and forging equipment and train wheels decreased from 82% in 2009 to 75%. As other sectors (wind power equipment, coal chemical industry, gear, castings and forgings and oil film bearings, etc.) gradually mature, the company has reduced its dependence on metallurgical related downstream industries.
12 years will be a tough year.
In the face of a decline in macroeconomic growth and a downturn in major downstream investments (black and non-ferrous metallurgical industries), the company will face a situation similar to that in the second half of 11 years. Although the NDRC has recently approved major projects (such as the construction of two 10 million ton steel mills), the demand driven by these investments will not be transferred to the company's orders and performance until a year later. In the short term, the company's manual task is still to win more orders in a difficult environment and to get through a difficult 12 years by strengthening internal management.
The future focuses on the high end: mining excavators, coal chemicals, high-speed rail axles and wheel equivalents, as the main downstream investment gradually recovers after the decline in macroeconomic growth, the company is expected to usher in the opportunity for performance improvement brought about by the downstream recovery by the end of 12 years. And relying on the company's excellent R & D and manufacturing capabilities, the future
There are many bright spots in the high-end equipment business: first, mining excavators-the company's mining excavators have become a world-famous brand and an absolute leader in China, and have won orders from major overseas mining countries such as Chile, South Africa and Russia. Recently, the company has completed the world's first 75 cubic meter excavator, which is expected to be debugged and installed by the end of the year. With the success of the trial in the future, it is expected to bring more orders for 13 years, driving the rapid growth of this piece of business; second, coal chemical industry-- the company's coal chemical equipment income has increased steadily in the past two years, and in the future, benefit from close cooperation with the second Chemical Institute will obtain more orders to contribute to the rapid growth of this sector. III. High-speed rail wheel axle and wheelset-the company's high-speed rail wheel axle project is expected to be put into production by the end of 12 years. As the only domestic target with both axle and wheelset technology, it is expected to become an important localization platform for high-speed rail wheel axle and wheelset. Fourth, Tianjin Lingang heavy equipment base-- the first phase of the base construction will be completed by the end of 12 years. With the base put into production, it is expected to form part of the production capacity of heavy equipment such as cranes, with the help of the transport advantages of the port, to achieve market expansion, and is expected to contribute benefits in 13 years; and the company is also actively involved in the marine industry with good market prospects, which is worth looking forward to.
Valuation and investment advice.
12 years is still a difficult year, with the gradual recovery of downstream investment and the release of high-end projects, the company's 13-year performance is worth looking forward to. The company's EPS from 2012 to 2014 is expected to be 0.13,0.19,0.28 yuan. Taking into account the company's high-end manufacturing projects are expected to continue to make breakthroughs, according to 13 years 20 times PE, the target price of 3.7yuan, for the first time to "overweight" rating.
Key issues of concern
Stock price catalyst (positive): Tianjin Lingang project production contribution performance, large excavator order acquisition, high-speed rail wheel axle and wheelset order breakthrough.
Risk hint (negative): rising raw material and labor costs and a slump in the industry brought about by declining economic growth.