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煜荣集团(1536.HK)新股报告

Yurong Group (1536.HK) IPO report

廣發證券(香港) ·  Jan 4, 2017 00:00  · Researches

The group's customer base mainly includes foundation engineering companies and contractors. According to the prospectus, citing Frost Sullivan's report, benefiting from planned development projects such as the Northeast New Territories New Development area in Hong Kong, the total amount of piling and related foundation works is expected to record an annual compound growth of 15% from 2010 to 2015, while the Hong Kong down-hole drilling tools industry is also benefiting from the report estimated to be 10.1% compound annual growth from 2015 to 2020. Although the market for down-the-hole drilling tools in Hong Kong is small, one of the company's advantages is that it is the largest supplier of down-hole drilling tools in Hong Kong in terms of revenue, accounting for 59.2% of the Hong Kong market. At the same time, the Group started selling products overseas in 2013 and expects increasing demand for down-the-hole drilling tools in new markets such as India and Canada to reduce its dependence on the Hong Kong market.

The annual income in 2015 was 141 million Hong Kong dollars, up 11.9%, and the net profit was 26.9 million yuan, up 27.6%, while the gross profit margin increased year by year, from 34.4% in 2014 to 44.6% in 2016. After listing, the market capitalization ranges from $380 million to $456 million, which is relatively low. Based on the share price, the share price is equivalent to 14.1 to 17 times 2015 earnings. To sum up, the company was given a "neutral" rating with a total score of 5.5.

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