Investment points:
The delivery of industrial cleaning assets was completed, and it was decided to transform into a global equipment service provider. The company and the counterparty signed a “Delivery Confirmation”, and both parties confirmed that the major asset purchase and settlement was completed. After the settlement was completed, the company and Carl Schenck AG jointly established the holding company SBS Ecoclean GmbH in Germany, of which the company held 85% of the shares. Dürr Group sold all of its industrial cleaning systems and surface treatment business, including equity and non-equity assets related to industrial cleaning systems and surface treatment business, to SBS Ecoclean GmbH or its subsidiaries. The company officially entered the field of industrial cleaning, and also transformed into a global equipment provider and service provider.
Dürr has a high market share, and the reintegration of the industrial chain has brought new growth in performance. The German Dürr Group has a 60% market share in global coating systems, has a history of more than 100 years, and operates in 28 countries around the world. Cooperating customers include Tesla.
The company's acquisition of Ecoclean is part of the Dürr Group's premium assets, with a market share of nearly 50% in North America and Asia. After acquiring Dürr Group, the company positioned itself as a global company and reintegrated Ecoclean's global factories, creating a scale effect. Net profit is expected to increase to around 15%. Over the next 3 years, the company's main performance will grow into industrial cleaning equipment and services, especially in the North American and Chinese markets. Previously, more than 60% of Dürr's cleaning business was in the automotive industry. The main increase in the company's performance in 17-18 will come from cleaning equipment and services in the domestic automotive industry. There is a large domestic gap in the medical devices and electronics sector, and it is expected that it will also perform. Currently, the Dürr Group has cooperated with many well-known automobile manufacturers. It has already started business in 7 regions of China, with a market share of about 10%. It is estimated that the market share in China in 17-18 will be 15% and 20%, respectively. It is estimated that the industrial cleaning and surface treatment business will achieve revenue of 1,573 billion, 1,991 billion, and 2,398 billion dollars in 16-18.
Maintain profit forecasts and maintain buying ratings. The listed company has divested the debt relating to the pipe gallery to the controlling shareholder, the wholly-owned subsidiary Lan Ying Intelligence has been cancelled, and the cash flow situation has improved dramatically. The company's performance bottomed out in 2016, achieving revenue of 180 million yuan and net profit of 15.58 million. The company was transformed into a global company. The estimated net profit for 17-18 is 156 million yuan and 233 million yuan, EPS is 0.58 yuan/0.86 yuan, and the corresponding PE is 29X/19X. Similar to companies in the machinery sector that are also related to German Industry 4.0, the average PE in 17 years is 40X, while Ecoclean is a scarce target for A-share industrial services and has global sales and industrial service experience. After the acquisition, listed domestic companies are optimistic about their expansion in the Chinese market. Conservative estimates give the industry an average valuation, that is, PE in '17 was 40X, the corresponding market value is 6.24 billion yuan, and the corresponding stock price is 23 yuan. There is 30% space from the current stock price, maintaining profit forecasts and maintaining purchase ratings.
