After Ruiling announced the equity incentive plan, we conducted a survey of the company and conducted in-depth exchanges with senior executives, combined with the development opportunities brought by the national "made in China 2025" and "Belt and Road Initiative" strategy to China's equipment manufacturing industry. the company is speeding up the implementation of welding robot development strategy. It is expected that future investment mergers and acquisitions will mainly focus on welding and robotics, the company's fundamentals and cash flow are far better than the industry, considering the future development of welding robot business, raise the target price to 45 yuan, corresponding to a market capitalization of more than 10 billion yuan. Callback is the time to buy!
1. Accelerate the implementation of welding robot development strategy and industrial 4.0 strategy.
Ruiling is a leading manufacturer of inverter welding and cutting equipment in China, and its main products are inverter welding and cutting equipment, welding automation products, welding accessories and protective equipment, etc. On the basis of maintaining the stable development of the welding industry, the company is speeding up the implementation of welding robot development strategy and strengthening the development of welding robot business plate.
About 57000 industrial robots were sold in China in 2014, an increase of 55 per cent over the previous year, accounting for about 1/4 of the global market. As the world's largest market, foreign robots account for more than 95 per cent of the market for welding robots. In terms of the number of industrial robots, it is estimated that welding robots account for about 45%, mainly high-end demand. In 2014, China imported 2800 welding robots from OTC alone. Ruiling is optimistic about this market and is confident to replace imports and make a profit.
Ruiling has carried out long-term tracking and research and development in the field of welding robots, and has worked with robot companies such as ABB to have mature technology reserves for robots and complete sets of welding robot equipment. In addition, the company has customers in aerospace, military and other industries, and has accumulated a wealth of practical experience in the process of cooperation with customers. Recently, the state has launched the "made in China 2025" and "Belt and Road Initiative" strategy, which has brought a good development opportunity for the transformation and upgrading of China's equipment manufacturing industry, which also requires the company to focus on accelerating the development of welding robot business. and export high-efficiency welding equipment to cooperate with the relevant key project construction of "Belt and Road Initiative".
We believe that Ruiling's long-term experience and technical reserve, as well as the introduction of relevant national development strategies and policies, contribute to the accelerated development of the company in the field of welding robot equipment, it is also conducive to foreign investment and cooperation in related fields.
2. With more than 1 billion cash in hand, epitaxial mergers and acquisitions may be the growth point in the future.
For the possible direction of investment M & An in the future, the domestic market mainly hopes to achieve synergy through M & A, and the direction will mainly focus on the welding industry and upstream and downstream. For the international market, the company is more optimistic about European small and medium-sized enterprises, with profound technological and cultural heritage and standardized operation, and the company is also actively looking for relevant strategic partners and investment M & A targets.
The company's introduction of equity incentives, on the one hand, shows that the company is full of confidence in the future development, on the other hand, from the performance target, 2016 growth target is the highest, indicating that in the case of declining industry growth, there may be epitaxial growth brought about by investment mergers and acquisitions.
3. the layout of welding machine and robot industry in the future.
Welding machine business is mainly distributed in Shenzhen and Kunshan, robot business, industrial 4.0 platform may be set up in Shenzhen. Shenzhen has industrial clusters for the development of robots, and Shenzhen also attaches great importance to the robot industry, which is a paradise for entrepreneurs and the future Silicon Valley of China, which is conducive to the future development of the company.
4. Create the whole solution of intelligent welding.
Ruiling's positioning and goal for one of the main industries of the welding industry is the overall solution of intelligent welding, from digital welding machine to welding robot, and then to welding robot workstation, and welding technology and solutions. intelligent welding can be realized through industrial 4.0 platform and intelligent terminal in the future. The company's current digital welding machine category structure accounts for about 50%, now has a stable dealer and customer base, and is expected to be upgraded in the future.
5. Open up the international market and match the American leader Lincoln Electric.
In 2014, the company's overseas sales accounted for 34.8%. This year, the company may be greatly influenced by Russia. In the future, the company may carry out overseas investment and cooperation, expand the sales scale and enter the European and American markets. Compared with the international leader Lincoln Electric, Ruiling's income and scale still have room for improvement. Lincoln Electric has sales of $2.8 billion in 2014 and has about 2400 employees in China. 90 per cent of sales come from the production of arc welding equipment and auxiliary materials, with a market capitalization of about $5.37 billion, 26 times and 5.8 times that of Ruiling. Lincoln's growth was also achieved through cross-border mergers and acquisitions. Since the 1990s, Lincoln Electric began to enter the international market, and the company has invested 325 million US dollars in overseas expansion.
6. Maintain a highly recommended-A rating.
Forecast 2015-2017 EPS0.58, 0.70,0.85 yuan, 2017 dynamic PE42 times, still lower than the average valuation of the smart equipment sector. At present, the stock price has reached the previous target price, considering the possible investment and mergers and acquisitions in the future, the company is expected to become an intelligent welding leader, growth model OTC, growth space for Lincoln Electric, the market capitalization is expected to reach more than 10 billion (depending on future acquisitions), raise the target price to 45 yuan, maintain a highly recommended rating.
7. Risk factors: M & A risk; macroeconomic risk; rising management cost risk of equity incentive.
