Kaizhong Precision is a high-tech enterprise focusing on the research, design, manufacture and sales of commutators for micro and special motors. it is a leader in the domestic commutator industry and occupies a considerable position in the international market. The number of shares in this public offering of the company shall not exceed 36 million shares, accounting for no more than 25.00% of the total share capital after the issue. The initial public offering price is 13.73 yuan, and the purchase date is November 15, 2016.
Main points of investment:
The company's C-type commutator and K-type commutator are the two most important products at present, accounting for about 80% of the revenue. The mainland has gradually become the main source of income in recent years, accounting for nearly 50% of the income. The company ranks first in domestic commutator production and sales for four consecutive years, and also occupies a considerable share in the international market.
Since 2015, the company's production capacity has increased slowly, and the capacity utilization rate and production and sales rate have remained high. With the continuous growth of orders, the company's existing capacity and venue can no longer meet the needs of market development.
In the situation of high customer certification barriers, the company has successfully reached a long-term cooperative relationship with many international first-class motor enterprises, with the top five customers accounting for more than 50%, which has a significant impact on the company.
The company's main products are expected to have limited global market growth in the next few years, although the prospect of new products is promising, but the short-term benefits remain to be seen, and the expansion of the company's existing product market share will be the main driving force of revenue growth during the forecast period.
The funds raised this time will be used for the new motor commutator project of Changsha Kaizhong Electric Technology Co., Ltd., and the high-end motor commutator industrialization and production base project of Shenzhen Kaizhong Precision Technology Co., Ltd., which will help the company break through the capacity bottleneck, enhance the company's market share and profitability, optimize product structure, and create new profit growth points.
We estimate that the company's 2016 Mel 2018 operating income will be 1.01768 billion yuan, 1.0991 billion yuan and 1.35189 billion yuan respectively; net profit of 105.97 million yuan, 11690 yuan and 14716 yuan per share; and earnings per share of 0.74 yuan, 0.81 yuan and 1.02 yuan. With reference to the 2016PE level of comparable companies, Kaizhong Precision is given a target price range of 37 yuan. It is recommended to apply for purchase.
Risk hint: the risk of capacity improvement is lower than expected, the risk of income growth is not in line with expectations, the downside risk of gross profit margin, the risk of high customer concentration, the risk of fluctuation of market valuation level.