Main points of investment
The company is an excellent domestic cooling tower manufacturing enterprise, with a market share of about 7.5%, ranking first in the industry. The company is mainly engaged in industrial cooling tower research and development, design, manufacturing and installation business, and rely on its own products and technical advantages to provide industrial cooling tower related technical services. The industrial cooling tower developed by the company is widely used in petrochemical, metallurgical, electric power and other industrial fields, ranking first in production and sales.
The company's business has developed steadily, with overseas business accounting for more than 50%. From 2014 to 2016, the company's operating income was 5.35,5.54 and 539 million yuan respectively, which remained stable as a whole. There are a large number of stock towers produced by the company in the market. with the passage of time, some of the stock cooling towers have entered the renewal and renovation period, and the updating speed of spare parts has been accelerated, which has promoted the sales of cooling tower accessories. The company's domestic customers include three barrels of oil, Baosteel, Guodian, Huadian Group and other large central enterprises, overseas end customers include Exxon Mobil Corp, Shell, Bayer, BASF and so on.
Downstream market demand remains at a high level, domestic manufacturers disorderly competition, sales of more than 100 million less than 10. Cooling towers are widely used in petrochemical, metallurgical, electric power and other industrial fields, and the demand for cooling tower construction and reconstruction in these downstream industries is maintained at a high level. There are many enterprises participating in the market, and the degree of industry concentration is not high. There are no more than 10 enterprises with annual sales of more than 100 million yuan, and there are about dozens of enterprises with annual sales of 10 million yuan ~ 100 million yuan. There are hundreds of cooling tower manufacturers in Shandong, Hebei, Zhejiang, Jiangsu and other places. Most of the domestic manufacturers compete disorderly, the product grade is not high, it is difficult to meet the needs of large-scale domestic supporting projects, and it is difficult for the products to enter the international market. There are few domestic cooling tower manufacturers, including Seagull Co., Ltd., Sinochem Engineering Cangzhou cooling Technology Co., Ltd., and overseas main competitors are Marley, Hamon and other international benchmark enterprises.
Profit forecast and rating: the company is the market leader of cooling tower segment in China, and its market share is expected to further increase. We predict that the EPS of the company from 2017 to 2019 will be 0.46 / 0.54 / 0.67 yuan respectively, an increase of 11.23% / 18.67% / 22.75% respectively over the same period last year. With reference to the valuation of the comparable company, and taking into account the future demand of the company's products and the competitiveness of the company, we think that it is reasonable to give the company 20-25 times PE in 2017, with a corresponding price range of 9.20-11.50 yuan. Coverage for the first time, no rating for the time being.
Risk tips: the risk of changes in demand in the downstream market; the risk of fluctuations in raw material prices.