Laws and regulations are gradually approaching the great development of the industry: the second draft of the Technical conditions for Motor vehicle Operation Safety (GB7258) was completed in May 2010. it is expected that the official document will be promulgated in 2011. since heavy trucks (> 12 tons) are included in the system requiring the installation of retarders (or other braking devices) for the first time, we expect that in the next three years or so, under both neutral and optimistic assumptions. The retarder market will reach 550000 sets and 730000 sets, about 8 times and 11 times of the 10-year sales scale.
Eddy current retarder-leading matching: other auxiliary braking devices (such as EVB) have poor performance and are difficult to comply with the relevant regulations of GB7258; the special situation of China also makes it difficult for hydraulic retarders to replace eddy current retarders, so we reasonably expect that eddy current retarders will be used as auxiliary braking devices in the future heavy truck market.
Terjia-the ideal carrier of the investment industry: as the pioneer and leader of China's retarder industry, the company currently enjoys a market share of about 30-40%. In the development process of China's retarder industry in the past 10 years, the company's products show obvious competitive advantages in quality, technology, cost and after-sales. Under the background of major changes in market scale and customer structure in the future, the company is rich in products and production capacity reserves, and is expected to maintain a high market share by virtue of the advantages of cost control and product stability.
Investment suggestion: with the launch of the new version of "Technical conditions for Motor vehicle Operation Safety", 2011 may be a critical time for the industry to change from "quantitative change to qualitative change". The company is the only investment target of the retarder industry in the A stock market. with the current high market share and the judgment of the company's competitive advantage in the future, we believe that the company is at the front end of rapid growth. It is expected to spread its wings and soar with the help of market expansion, so it is an ideal carrier to invest in the retarder industry. Give the company positive investment advice-"buy". It is estimated that the 10 -, 11-and 12-year EPS is 0.19,0.23,0.33 yuan, corresponding to PE 79.42,67.05,46.60 times.
Risk tips: 1, alternative products occupy the retarder market space to a large extent; 2, the company's market share has declined significantly; 3, the launch time of the new version of GB7258 has certain uncertainty; 4, the future growth rate of heavy truck, large and medium-sized passenger industry is uncertain; 5, A stock market systemic risk has a greater impact on the company's stock price.
