The stock of flat knitting machine equipment has entered the renewal cycle, and the company's main business is expected to grow significantly. The life of computerized flat knitting machine is 6-8 years. The last sales peak of the domestic industry was from 2009 to 2011, with an annual growth rate of about 100%. After 2011, sales gradually declined and reached a low point in 2015, with about 500000 units in the whole market and more than 150000 units in the company. At present, the life of knitting flat knitting machine equipment is close to the critical point, and the renewal demand will become the leading force in the demand of knitting flat knitting machine. The company, as the leading enterprise in the flat knitting machine market, has been the first to benefit from the explosive growth of orders since the second half of 2016. It is expected that 2017 will be the first year of the company's main business, and its performance will maintain a growth rate of 40% to 50% in the next three years.
The scale of the overseas market is expanding, accelerating the capture of overseas market share. The company has strengthened its overseas sales and expanded its market share and influence. The company's overseas revenue accounted for nearly 40% in 2015. The company's exports to Bangladesh account for 60% of its overseas export business. Bangladesh is an important production base of textiles in the world, with a stock of about 300000 hand machines, which is in urgent need of upgrading. The company has increased its marketing to Bangladesh and expanded its overseas market share. It is estimated that the company's export volume of computerized flat knitting machines will increase by 40% in 2017.
The downstream demand of the shoe upper machine is growing rapidly, and the volume will be gradually increased in the future. The improvement of consumers' requirements for the performance of sports shoes has promoted the promotion and application of vamp machines, which will gradually replace the original shoemaking technology. At present, Nike Inc, Adidas and other companies all take the flying woven shoes produced by the upper machine as the main series. With the deepening of the machine generation, the shoe upper machine is expected to gradually increase. The company's shoe upper machine increased by 139.43% in the first half of 2016 compared with the same period last year, and the effect is beginning to show, and will continue to grow rapidly in the next few years.
Enter the field of mobile Internet and robots, the layout of the whole industry chain to achieve industrial upgrading. The company acquired Internet companies of Duoyi Le and you Investment Company, and successively invested in the layout of Cixing Robot, Suzhou Dinna and Dongguan Zhongtian, with the "cloud customization platform" as the center, connecting the design, production, marketing and supplier systems. through Internet + advertising business to introduce traffic, and through the robot field to achieve industrial transformation to establish a new knitted clothing industry chain.
Profit forecast and rating: we expect the company's net profit in 2016-18 to be 130 million, 272 million and 380 million respectively, corresponding to 0.16,0.34,0.47 yuan in 2016-18 EPS and 70X, 33x and 24X respectively in PE. Coverage for the first time, giving the company a "highly recommended" investment rating.
Risk hint: overseas market development risk; new business development is not as expected.