matters
Through research, we found that the company's positioning as a process automation instrument supplier has benefited from overall industrial development and progress. After several years of development, compared with other industrial control suppliers, the company has embarked on a unique path of import substitution.
Key Views
The company focuses on the field of process automation instruments. The product line is rich, downstream is scattered, and many breakthroughs have been made to maintain performance growth of more than 25%. The company's main products include electric actuators, flow meters, signal conditioning meters, control valves and other instruments. Downstream involves metallurgy, non-ferrous metals, chemicals, petroleum, electricity, building materials, environmental protection, water treatment, pharmaceuticals and other industries. All kinds of products are widely used in downstream industries, helping to ensure stable performance. The growth rate for the next three years will exceed 25%.
With the exception of electric actuators, the other four types of instruments have achieved rapid growth of more than 30%.
The company's transformation path can be expected, using agents for foreign-funded brands to achieve independent research and development, and obtain high gross profit. Some of the company's products achieve a win-win model with foreign-funded brands: foreign-funded brands authorize the company to assemble technology, the company procures cheap raw materials and develops and produces products, and sells them to foreign-funded brands, which can not only increase profit margins without losing the foreign-funded brand effect, thereby increasing gross profit margins.
The company's various products have just entered the industry, accounting for less than 1% of the overall market, and the prospects are very broad. The instruments currently made by the company are mainly used for fluid control. Their market size can reach 20 billion. The company's sales are currently less than 200 million, and the space is vast.
The funds raised are used to continue developing the original business. The available capital was raised about 290 million yuan, of which 94 million were invested in three types of industrialization projects: smart meters, electric actuators, and flow meters. Production only began in 2011/10, and revenue will not be partially confirmed until 2012, when the existing business strength will be further strengthened.
Profit forecast: We expect the company's diluted EPS from 2010 to 2012 to be 0.56, 0.80, and 1.10 yuan, respectively. The P/E of the corresponding company was 42, 30, and 21 times, respectively. PE was 30 times higher in 2011, and the GEM price was low, so it was given a “recommended” rating.