The company is the global sapphire leader, continuous layout of sapphire processing and equipment. At present, the company has the industry leading advantage in the large-scale production of sapphire crystal and the equipment manufacturing of single crystal furnace, and cuts into the processing link of hard and brittle materials through epitaxy to gradually improve the layout of the whole industry chain.
The company's performance has improved steadily in recent years, with a growth rate of more than 60%. Make it bigger and stronger through scale effect, invest in the research and development of high-margin single crystal furnace equipment products and new sapphire crystal block products to improve product structure and maintain their own profitability. According to Yole Development, the overall sapphire market will maintain a compound growth rate of about 36% and is expected to reach $4.944 billion in 2019, and the company is expected to continue to grow its share.
The company completed the 100% equity acquisition of Jiangxi Xinhang Science and Technology in December 2015. Through continuous technology accumulation, Singapore Airlines Science and Technology will conduct forward-looking research according to the technological development direction of the industry, so as to provide technology and product reserves for future development. At present, the company's products mainly include 3D glass hot bending equipment, 3D arc polishing equipment and all kinds of engraving and milling equipment. After the completion of the acquisition, the company has increased its investment. At present, the 3D hot bending machine has been shipped in small batches, and we expect that it will become the second star product besides the company's single crystal furnace in the future, which will be a new growth point of the company's performance.
Investment suggestion: the company will make efforts in both new materials and new equipment in the future, with the help of the strong industrial strength of the Northeast, materials from sapphire crystal business to mobile phone cover plate, DLC, quantum dot film, etc.; equipment from single crystal furnace to 3D hot bending machine development, is expected to achieve new star product sales, announcement and Huaying science and technology strategic cooperation, the future is expected to expand the scale of equipment sales. Based on the company's future growth, it will be given a buy-An investment rating with a 6-month target price of 40 yuan. We expect the company's revenue to grow by 211%, 41% and 38% respectively from 2016 to 2018, and net profit to grow by 172%, 32% and 24% respectively, equivalent to a dynamic price-to-earnings ratio of 30 times in 2017.
Risk hint: the sales of 3D hot bender are not up to expectations, and the progress of research and development of new materials is not as expected.