Hangzhou gear has stabilized at about 20% of the domestic construction machinery gearbox market in the past five years, and it is the largest professional and independent supplier of construction machinery gearbox in China. Is the drafting and formulation of national industry standards, in December 2010, the company won the Chinese construction machinery parts industry special contribution brand "construction machinery transmission parts industry special contribution award". IPO investment project annual production of 12000 sets of electro-hydraulic control construction machinery transmission will enhance the supporting capacity of high-end construction machinery products.
Ship gearbox technology is in the lead, ranking first in China. Hangzhou Tooth is a marine gear transmission manufacturer with the widest application field and the widest type spectrum in China, with the design, development and manufacturing capacity from 10kW-10000kW marine gearbox. The company also has the design and manufacturing technology of adjustable propeller, marine gearbox and high elastic coupling, which can be used for integrated packaging and supply of marine adjustable propeller propulsion system. Ship products are also equipped with military products.
Wind power gearbox is the future growth point of the company. Hangzhou teeth is one of the earliest enterprises involved in the research and development of wind turbine gearbox in China, but its development lags behind Nangao teeth and heavy teeth due to historical reasons. In November 2010, Hangzhou teeth signed a sales contract with a wind power company for the gearbox of 2MW wind turbines, with a total contract amount of about 392 million yuan, which will be delivered this year.
Performance forecast: it is estimated that the EPS of Hangzhou teeth forward for 10, 11 and 12 years is 0.36,0.46,0.62 yuan, and the dynamic PE in 2011 is about 30 times.
Oversold and rebounded investment opportunities. From the PE point of view, as a secondary IPO Hangzhou tooth valuation does not have an advantage, but from the market value point of view, Hangzhou tooth forward as a gearbox industry leader, the market capitalization is only 5 billion, only half of China Transmission (0658HK), in addition the company established a factory in the south bank of the Qiantang River in Hangzhou in the 1960s, covering an area of 350000 square meters, sooner or later face relocation, implied land value of 1 billion yuan or so. In addition, the Hangzhou tooth ship gearbox is matched by military ships and should enjoy a valuation higher than that of the industry. In the long run, the company's market capitalization is also undervalued.
Risk hint: the rise in raw material prices has a greater impact on the general machinery industry; the initial profit level of the new project is lower than expected.
