With reference to the valuation of air conditioner upstream and plastic manufacturing companies, it is recommended to give a fully diluted EPS0.65 yuan 20X-22X valuation in 2011, with a purchase price of 13.0-14.3 yuan.
1. The air blade is a key accessory product that affects the performance of the air conditioner. Each air conditioner generally uses two air blades, and its function is to make the air flow through the heat exchanger through the rotation of the air blades, so that the refrigerant inside the heat exchanger can exchange heat with the air outside. As one of the main accessories of downstream air-conditioning products, plastic air-conditioning blades have a direct impact on the quality of air-conditioning products.
2. Shunwei is a professional manufacturer of plastic air conditioning blades with the largest and highest market share in China. Zhejiang Langdi Group, which ranks second, has a turnover of less than half of the company in 2010.
Shunwei is also engaged in the design and manufacture of modified plastics and moulds, and is one of the few professional plastic air conditioning blades manufacturers in the industry with comprehensive supporting capabilities to better ensure product quality.
3. Competitive advantage has been established. The combined sales of important customers such as Gree, Midea, Samsung, Panasonic, Fujitsu, Daijin and Kaili accounted for 76.58%, 77.78% and 79.34% of the company's operating revenue in 2009-2011, respectively. Shunwei has worked with these companies for more than 10 years and is the largest supplier to Gree and Midea. It is very difficult for competitors to replace the company.
4. The market supply and demand situation, production and marketing characteristics of the air conditioning industry are basically consistent with the air conditioning market, and there are scale barriers and technical barriers. The air-conditioning industry is a typical duopoly, with Gree, Midea and Haier accounting for a combined production share of more than 70%. We believe that the integration of the air conditioning industry is not over, and the share of leading companies still has room to increase. As the main partner of Gree and other companies, Shunwei will also benefit from the increase of concentration in the air conditioning industry.
5. The wind blade industry and the air conditioning industry are highly positively correlated, and the company's revenue growth will slow down with the air conditioning industry, so it is difficult to reproduce the high-speed growth. In the 2012 report on the operation of the air conditioning industry, we forecast that the domestic demand for household air conditioners from 2012 to 2014 will be 10.3% CAGR. Under the pressure of high inventory and high base in the same period in 2011, the actual output of household air conditioners across the country is likely to grow negatively in the first half of 2012, and the output growth rate for the whole year is about 5% in the second half of the year. According to the monitoring data of Aowei Consulting, the total sales of air conditioners in terminal retail channels are still showing negative growth so far this year.
Corresponding to the adjustment of the air conditioning industry, Shunwei's income in 2011Q3 and Q4 has declined slightly.
Investment advice: under the optimistic assumption that the company's share is expanding, the revenue growth rate is higher than the average growth rate of the wind leaf industry and the compound growth rate of air conditioning production, and the gross profit margin is the same as in 2011, we expect the net profit growth rate of the company to belong to the parent company to be 16.7%, 14.4% and 11.1% from 2012 to 2014, and the fully diluted EPS is 0.76 yuan, 0.87 yuan and 0.96 yuan respectively.
Risk factors: major adverse events in Europe affect air-conditioning exports; the negative impact of real estate on air-conditioning production is higher than expected; air-conditioning sales in terminal channels remain depressed; household appliances to the countryside policy is gradually withdrawn.