Investment logic
To the weak and help the strong, focus on the high-end manufacturing industry: before 2009, the company was a controlling company with many businesses, the good and the bad intermingled, and the growth rate was not fast; now the company has made clear the development idea of focusing on the high-end manufacturing industry. in the future, the development of advantageous industries such as transmission and distribution porcelain, clean environmental protection and surveying and mapping instruments will gradually peel off other assets, and the inflection point of management ideas will bring substantial improvement in performance.
Sujing Group is an invisible asset undervalued by the market: Sujing Group, which has a 91.93% stake in Chuangyuan Technology, is a leading company in China's clean environmental protection industry, representing the highest national level in the field of clean air. It is also strong in wastewater / gas / sludge treatment and small gas separation equipment, and is expected to maintain 40 per cent compound growth from 2011 to 2013.
Expand production capacity and consolidate the leading position of transmission and distribution porcelain: the original Suzhou electric porcelain and the newly acquired Fushun Hi-Tech have complementary advantages in the field of transmission and distribution porcelain, which can improve the company's product structure and raise the level of gross profit margin. In terms of output value, it has surpassed Dalian electric porcelain to become the new leader of domestic power transmission and distribution porcelain; at the same time, the company plans to obtain 466 million yuan of private additional funds for the construction of Suqian electric porcelain base, which will consolidate the company's leading position in domestic electric porcelain.
Investment advice and valuation
We predict that the diluted EPS of the company from 2011 to 2013 will be 0.536 yuan, 0.751 yuan and 0.994 yuan respectively, with year-on-year growth rates of 125.63%, 40.23% and 32.27%, respectively.
After comparing the corresponding valuation level of each industry, the split of the company's business is valued separately, and the valuation result is 18.86 yuan, corresponding to 35X11PE and 25X12PE, which is higher than the recent IPO price of 15.50 yuan. It is recommended to "buy".
Risk
The company failed to invest in the Suqian project, the market could not effectively accept the new capacity after the production expansion project was put into production, the State Grid maliciously depressed the price of electric porcelain insulators, and the business expansion of Sujing Group fell short of expectations.
