The prosperity of the industry has declined, and the growth rate of transportation and support equipment has slowed down. Transportation and support equipment are the company's strengths, accounting for 80% of the main revenue, and have independent production capacity of core components such as reducers and hydraulic cylinders; these two businesses may decline due to insufficient demand from downstream coal enterprises. The successful research and development of extractive equipment has enhanced the company's complete set capacity of fully mechanized mining, and with the launch of new products, the business may achieve certain growth in the next two years. In addition, as a new business of the company, the life capsule is expected to be secured in the second half of the year, and the company has made full preparations for mass production.
The technology of complete sets of equipment in thin coal seam is leading, and differentiation has become a bright spot. The company regards thin coal seam equipment business as the direction of differential development, and is the first coal machine manufacturer in China to produce complete sets of equipment for fully mechanized mining of thin coal seam. Fund-raising projects will further consolidate the advantages in this field. At present, the company's thin coal seam business accounts for about 30% of the revenue, and the growth rate is limited by the general environment in the short term, which will help to maintain the stability of the company's performance in the future.
Implement key customer strategy and strengthen customer credit management. Compared with the listed companies in the industry, the current customer structure of the company is more scattered, resulting in poor product profitability, and the decline in the solvency of small and medium-sized customers affects the company's payment recovery. Therefore, on the one hand, the company actively implements the key customer strategy to improve customer institutions; on the other hand, it strengthens the credit management of customers and strives to maintain the smooth flow of the company's money back and the continuity of operation.
New progress has been made in the sale of shares in Baishupo Coal Mine. According to the latest development, the company has sold a 51 per cent stake in Baishupo Coal Mine and has received 139.74 million yuan in equity transfer. According to the agreement, before January 10, 2013, the equity acquisition will pay 20.4 million yuan to the company; the remaining 188.7 million yuan will be paid within 3 years at the latest, and the interest fee will be calculated at an annual interest rate of 12%. The partial recovery of the equity transfer will help to alleviate the tight cash flow of the company; interest income will have a significant impact on the financial expenses of the company.
Reasonable share price 5.50 yuan, lowered to "neutral-A" rating. We forecast that the company's revenue from 2012 to 2014 will be 15.57,15.07 and 1.503 billion yuan respectively, and the corresponding EPS will be 0.25,0.24,0.22 yuan respectively. The average price estimated by OPFCF and FCFE model is 4.49 yuan. As of October 23rd, the closing price of the company was 5.71yuan. considering the stabilization of coal prices, the short-term operating risk of the company was fully released and a certain valuation premium was given. according to the calculation of 22 times PE in 2013, the reasonable share price of the company was 5.50yuan. Downgraded to "neutral-A" rating.
Risk tips: coal prices continue to fall sharply; the implementation effect of the key customer strategy is not as expected; the bad debt rate of accounts receivable has increased significantly; equity transfers can not be recovered on schedule.
