The company specializes in R&D, production and sales of submersible pumps, small submersible pumps and land pumps for wells. According to the statistics ranking of the Drainage and Irrigation Branch of the China Agricultural Machinery Industry Association, the company is currently the largest manufacturer and exporter of submersible pumps for wells in China. It has more than 40 series and more than 2000 models of products, which are widely used in agricultural and forestry irrigation, domestic water intake, industrial water supply, pumping station water, municipal engineering, building water supply, and sewage/purification treatment. With excellent quality, its own export rights and excellent service, Dongyin sells its products to more than 60 countries and regions, including Asia, Europe, and Africa.
In 2016, the global submersible pump market volume was $3 billion, with China accounting for more than 45%. Currently, all countries around the world are facing the problem of lack of water resources, and abundant groundwater resources can solve the problem of global water scarcity, and submersible pumps are the main tool for groundwater development. According to statistics from the Drainage and Irrigation Machinery Branch of the China Agricultural Machinery Industry Association, it is estimated that by 2016, global well submersible pumps will double compared to 2011, to reach 3.07 billion US dollars, with a compound annual growth rate of nearly 15%; in 2016, China's well submersible pumps will triple compared to 2011, reaching 9.66 billion yuan, with a compound annual growth rate of nearly 25%. At present, China's submersible pump market demand accounts for more than 45% of the global market.
The company's competitive advantage is remarkable, and its domestic market share ranks among the highest. The company has significant advantages in various fields such as technology research and development advantages, product quality and cost performance, market, and brand. According to statistics from the Drainage and Irrigation Machinery Branch of the China Agricultural Machinery Industry Association, the company's sales scale of submersible pumps for well use ranked first in China for two consecutive years in 2012 and 2013; it also had a high market share in Asia and Africa.
Production capacity bottlenecks are expected to ease by the end of the year. One of the company's IPO fund-raising projects is a submersible pump construction project with an annual output of 1 million units. After completion, 800,000 new submersible pumps for wells and 200,000 units of small submersible pumps will be added, which will increase the company's annual sales revenue of 642 million yuan and net profit of 63.27 million yuan. While the company's production capacity bottlenecks are expected to be alleviated, the company will also gain momentum for growth. Currently, the construction of a fund-raising project with an annual output of 1 million submersible pumps is in the final stage. It is expected that it will be ready for use by the end of the year.
Profit forecasts and investment ratings. The company's earnings per share in 2016-2018 are expected to be 0.97 yuan, 1.08 and 1.44 yuan respectively. Based on the calculation of the closing price of 72.00 yuan on the previous trading day, price-earnings ratios are 74 times, 67 times, and 50 times, respectively. For the first time, the company was given a “prudently recommended” investment rating.
Risk warning: 1) Competition in the submersible pump market intensifies; 2) The impact of exchange rate fluctuations.
