Research conclusion
The company is the leading overall solution provider of electrical contact materials in China. The company is mainly engaged in the research, development, production and sales of electrical contact functional composite materials, components and components, and the products are widely used in low-voltage electrical appliances, household appliances, automotive products and other fields. As of June 30, 2010, the company's total industrial output value, sales revenue, total profit and sales profit margin are among the top three of similar products in the electrical alloy industry. In recent years, the company is in a stage of rapid growth, with a compound growth of 63.93% in operating income and 122.60% in net profit from 2008 to 2010. From January to June 2011, operating income increased by 121.70% over the same period last year, and net profit increased by 198.69% over the same period last year.
Complete product line, the ability of secondary development of professional equipment and high-quality and stable customer resources are the core competitiveness of the company to lead the industry. At present, the company produces more than 5000 kinds of electrical contact materials, with a complete product system from the preparation of various electrical contact materials to the processing of integrated electrical contact components, which can meet the performance requirements of all low-voltage electrical appliances. At the same time, the company independently developed a large number of low-cost, high-efficiency special automatic production equipment not only to meet the personalized production needs of different customers, but also greatly reduce product costs and ensure product quality. With the advantages of product quality, technology and price, the company has won the recognition and trust of Zhengtai Electric, Delixi Electric, Emerson, Sensata, Cooper, General Electric Co and other well-known enterprises, and customer orders have gradually expanded.
With the increase of product sales and the increase of product unit price, the two-wheel drive company will grow rapidly. We believe that with the rapid growth of demand from existing major customers (Zhengtai Electric and Delixi Electric) and the gradual increase in the market share of potential high-quality customers (Schneider, ABB, Siemens, Emerson, General Electric Co, Cooper, Sensat), the company's product sales will maintain a growth rate of about 30% in the next three years. At the same time, due to the fluctuation of the silver price of raw materials, the improvement of the quality and performance of the company's products and the adjustment of the product structure, the unit price of the company's products will rise steadily in the next three years, and the gross profit margin will decline slightly.
The company's production capacity is worry-free, ensuring the order demand of major customers and potential customers. We expect the investment project to be put into production of 20% this year, 60% in the second year, and reach production in the third year. After reaching production, the production capacity of layered composite electrical contact functional composites and components will be increased from 1260 tons to 1810 tons, with an additional production capacity of 550tons. The production capacity of particle and fiber reinforced electrical contact functional composites and components will be increased from 50 tons to 155 tons, with an additional production capacity of 105 tons, greatly enhancing the production capacity of the company's products and ensuring the order demand of major customers and potential customers.
We estimate that the EPS of the company from 2011 to 2013 is 1.15,1.54 and 2.05 yuan respectively. Considering that the company is the first listed company of electrical contact composite materials in China, and combined with the growth of the company and the average level of its industry, the target price of 25 times PE,12 in 2012 is 38.5 yuan, giving the company a "buy" rating for the first time.
Risk factors: the company may have the risk of customer concentration and raw material price fluctuations.
