Based on the plumbing equipment industry, the profit level is stable. The company is an advanced professional plumbing equipment manufacturer in China, mainly engaged in the research, development, manufacture and sales of fluid control equipment and equipment, including copper plumbing valves, pipe fittings and other plumbing equipment. mainly used in residential houses, urban buildings and municipal pipe networks and other facilities of water supply and drainage, heating, ventilation, gas supply and other systems. Valve products are traditional advantage products of the company, and the proportion of revenue has been increasing since 2013, accounting for 78.44% of the revenue of valve products in 15 years; pipe fittings are an important part of the pipeline control system, which is similar to valves in process, accounting for 16.27% of revenue in 15 years. The company's profit level is stable, and the gross profit margin is stable at about 29.5% in 13-15 years.
The company's products are mainly export-oriented, facing high-end customers in Europe and the United States. Over the past three years, the company's export business accounts for about 90% of its revenue, mainly for high-end customers in Europe, North America and other regions. The company adheres to the customer development strategy of "aiming at the top three in the same country or region". After the complex factory inspection procedures and supplier training plans of high-end customers, we will get stable business and profit guarantee. The 2008 financial crisis led to a downturn in market demand for plumbing equipment in Europe and the United States, and began to recover gradually from around 12-13 years, and the prosperity of the company's business is expected to rise gradually. At the same time, the company plans to gradually open up the domestic market and constantly improve its income level.
Master lead-free copper processing technology, healthy plumbing has great achievements. Copper plumbing equipment with high lead content will increase the intake of lead and damage human health. In 2014, the United States formally implemented the lead-free bill, promoting the upgrading of the lead-free plumbing market and the rapid growth of demand. Compulsory lead-free is expected to become the future trend of industry development. However, lead-free copper has high processing difficulty. After years of research and development and accumulation, the company is one of the few domestic manufacturers that master the processing and process control technology of lead-free copper products, and has realized the mass production of lead-free copper valves and pipe fittings. in the past three years, the sales of lead-free products accounted for about 40%. In the case of the development of green, healthy and energy-saving plumbing equipment and the expansion of production capacity of fund-raising projects, the company's competitiveness will continue to improve.
Fund-raising project: the funds raised are intended to be used for the new annual production line project of 30 million sets of lead-free plumbing equipment and the valve R & D and testing center project, and the remaining funds are used to supplement liquidity. The implementation of this fund-raising project will greatly improve the production capacity of the company's lead-free valves and pipe fittings, improve the company's research and development level, and improve the company's profitability and market competitiveness as a whole.
Profit forecast: the number of new shares issued by the company is 25 million shares, accounting for about 25% of the total share capital after the issue, the amount raised is about 371 million yuan, the issue fee is 43.0373 million yuan, and the issue price is about 14.85 yuan per share. The EPS of diluted computing company from 2016 to 2018 is 0.71,1.08,1.54 yuan per share respectively. Considering the comparable company's 16-year PE valuation and the revenue growth brought by the company's fund-raising project, we give the company 35-40xPE for 16 years, and the reasonable value range should be 24.85-28.40 yuan.
Risk tips: fluctuations in raw material prices, weak global economy, and risk of policy change.