[Smart Optoelectronics UM Gas M produces A product with no] services. The products include electrical control equipment without power cable products. Services include energy saving services without electricity services. The application areas involved in the business include electricity, industrial energy saving, and regional integrated energy. The company's integrated energy industrial park was completed and put into use at the end of last year. The industrial park will serve as a platform for multi-level interaction in the field of integrated energy, creating a closed-loop service model for power construction design, operation and maintenance, energy saving, and electricity sales. The company is currently one of the few companies in the industry that achieves substantial revenue from electricity services. It is expected to become a model for future power reforms. Investors are advised to focus their attention.
Key points of investment:
There are few companies in the industry that have achieved substantial revenue from electricity services. In 2016, the company's electricity sales business achieved a “0 to 1” breakthrough. The company's performance last year fell short of expectations. The main reason is that some electricity service projects were affected by construction progress, revenue could not be confirmed according to the plan, and the unconfirmed portion will recognize revenue this year. The company began laying out the electricity service business at the end of 2014, and has a great first-mover advantage. Currently, the company has 8 local and municipal electricity service companies and 4 monitoring centers. The “Intelligent Electricity Service Platform” is working well. The company's offline electricity service network is expanding rapidly, mainly distributed in Guangdong, Guangxi, Yunnan and other provinces. The company uses electricity sales services as an entry point to expand regional user resources and drive the development of the entire electricity service. In 2016, the company sold nearly 300 million kilowatts of electricity, and it is estimated that electricity sales will grow by more than 300% in 2017, thus driving rapid growth in the electricity service business.
Reduce emissions and increase efficiency through energy saving services, and create comprehensive energy saving services for 'industrial energy-saving - power plant energy-saving - regional integrated energy utilization'. The company's energy saving services mainly revolve around three core advantageous businesses, including power plant energy saving and efficiency enhancement, industrial electrical energy saving and efficiency, and industrial waste heat and pressure utilization for power generation. The company's energy saving services mainly include two categories. One type is energy recycling to reduce emissions and increase efficiency; the other type is optimization and transformation to improve usage efficiency. The company is leading the industry in energy saving services. A number of industrial energy saving and power plant energy saving projects have been implemented one after another and are operating well. The energy saving business has the highest gross margin and net profit margin among all of the company's businesses, and there is broad scope for future development.
The electrical control equipment business is growing steadily. The main room for growth this year lies in market segments such as port shore power.
Electrical control equipment is the company's traditional business. Most products are developed using the same source technology. Among them, high-voltage inverter products account for the largest share. The main room for growth in this business this year lies in the port shore power business. The company's Qingdao port shore power project has been successfully put into operation. The project is the first high-voltage shore power project in China to provide a complete set of technologies. Furthermore, with the gradual recovery of the industrial control automation industry, industrial upgrading and import substitution will bring new demand for electrical control equipment, and the optimization and replacement of stock equipment will also provide new incremental space.
The cable business is expected to grow at a high rate this year, providing stable performance guarantees. The company completed the merger and acquisition of Lingnan Cable in October 2015. Due to factory relocation, production line adjustments, etc., the cable business capacity utilization rate was less than 40% in 2016, and is expected to reach or even more than 50% this year. Lingnan Cable pays attention to R&D investment in special cables to guarantee the gross margin level of products. The cable business provides the company with relatively stable performance and has a large market space.
Profit forecast: It is predicted that in 2017-2019, the company's EPS will be 0.19/0.24/0.30, and the corresponding PE will be 39/31/25 times. Considering that the company's service business is expanding smoothly, the future market space is broad, and the electricity service business has a first-mover advantage, the company will be given 50 times PE in 2017, corresponding to a target price of 9.5 yuan.
Risk warning: the risk that the electricity reform process does not meet expectations and the confirmation of project revenue does not meet expectations