Investment advice:
Upgrade to "overweight" rating. It is estimated that the EPS of the company in 13-15 years is 0.35,0.43 and 0.51 yuan respectively. According to 25 times PE in 13 years, the target price is 9 yuan.
Key assumptions:
(1) in the next two years, the demand for Roots blowers in the field of sewage treatment will grow by 25-30% compared with the same period last year.
(2) the gross profit margin of grease-lubricated Roots blower for sewage treatment is 1-2 percentage points higher than that of traditional products.
A different understanding:
It is generally believed that the market capacity of the company's Roots blower is small and the demand growth space in the downstream industry is limited. We believe that the demand of Roots blower in the field of sewage treatment will grow rapidly, and there is still room for doubling the capacity of the domestic market.
(1) the growth of sewage treatment scale, the improvement of equipment operation rate and the success of new product research and development will jointly promote the rapid growth of Roots blower in the field of sewage treatment. During the 12th five-year Plan period, the scale of new sewage treatment and renovation in China increased by 28.7%. According to our estimates, the demand for blowers is close to 3 billion yuan; the treatment of sewage theft will increase the operation rate of equipment and increase the demand for renewal; the advent of grease-lubricated Roots blowers for sewage treatment will further enhance the competitiveness and market share of the company's products.
(2) the expansion of the application field of Roots blower will expand the market capacity. The Roots blower in the American market is widely used in food transportation, life cleaning and other fields, with an annual demand of about 70-8 billion yuan. However, the annual demand of Roots blower in China is less than 2 billion yuan, and its application is mainly limited to the industrial field, and there is still room for expansion in the future. Stock price catalyst: new products will be mass produced by the end of the year.
Risk Tips:
The risk of slow recovery of demand in downstream coal, cement and other industries.