Main points of investment:
The company is the leader of large-scale castings of wind power, with a global share of about 30%. It has a strong voice and performance flexibility in the upstream of wind power equipment and the replenishment cycle of the whole machine factory. The company's strong casting equipment, process strength can be extended to other major equipment areas, and contribute to the performance increment. The company's cash on hand can further expand its business areas.
Wind power large casting bibcock, high barrier. The company is the leader of large-scale wind power castings, with a global market share of about 30%. The main customers include GE, Vestas, Xinjiang Goldwind Science & Technology, Vision Energy, United Power and so on. At present, the main participating enterprises in the fan casting industry are divided into two categories, one is enterprises specializing in the production of wind power-related castings, including Jixin Technology, Jiali Technology, Wuxi Bridge, etc., and the other is comprehensive equipment enterprises with strong casting capability. including Sinovel Steel, Ningbo Riyue, Jiangsu FAW and so on. The market concentration of fan casting industry is high, and the barriers are reflected in hard power and soft power. In terms of hardware, the company is equipped with leading equipment, including melting furnace, heat preservation furnace, crane, etc., which can cast 150m 160 tons of products, which has a significant advantage in large capacity products. Soft power is the finished product rate of casting, casting is a process, there is experience in mold design and cooling time, and the level of finished product rate determines the profitability and even survival of the enterprise. Jixin Technology currently has a finished product rate of more than 90%, reflecting a significant competitive advantage. The company's leading position determines its bargaining power on upstream and downstream, and improves performance flexibility in the business cycle.
Wind power installation is booming, and parts and components enterprises are benefiting. Benefiting from the improvement of wind power grid-connected environment and the improvement of wind farm performance, the abandonment rate of wind power in China continues to decline, and good IRR returns drive enterprises' enthusiasm for wind power investment. At the same time, the National Energy Administration has been leading cross-regional power transmission from top to bottom this year, encouraging the development of wind power and solving the problem of air pollution. China's wind power construction is in an upward cycle, and the new installed capacity is expected to reach about 20GW this year, an increase of about 24% over the same period last year. Due to the continuation of the US PTC policy in overseas markets, the market will recover rapidly, and the growth rate of global wind power installation is expected to reach about 30 per cent in 2014. The boom in the demand for wind power equipment will directly drive the parts market. Jixin Technology has significantly benefited from the initiative of machine manufacturers to replenish inventory and improve the demand elasticity of parts enterprises. Domestic wind power manufacturers have experienced continuous destocking in 2012 and 2013, the bottoming out of wind power in 2013 and the continued growth of market demand in 2014, and the industry has entered an active replenishment period (see attached figure). The market demand of spare parts enterprises will be more flexible than that of the whole machine factory, and Jixin Science and Technology as a casting dragon will fully benefit.
The business scope has a strong expansibility. The company's foundry business has strong equipment and process capabilities, and is expected to achieve business expansion in the future, such as military industry, nuclear power and other fields, contributing to the manufacture of major equipment in our country. In addition, the company's paper cash exceeds 600 million yuan, and the asset-liability ratio is only about 38%. Idle funds also have a strong investment capacity and can seek a better return on investment.
Profit forecast and investment advice. Due to the prosperity of the wind power equipment industry, the active replenishment of inventory by machine manufacturers and the high voice brought by the company's leading position in the industry, Jixin Technology has a strong performance flexibility. The strong equipment and process capability of the company's foundry business can be extended to other major equipment fields. The company is expected to earn 0.17,0.32 and 0.42 yuan per share from 2014 to 2016, respectively, and the current price-to-earnings ratio of the stock price is 38 times, 20 times and 16 times, respectively.
