Summary of the report:
Domestic needle roller bearing leader, belt pulley is expected to become the company's new revenue growth point the company is in a leading position in the needle roller bearing industry, in recent years, the overall economic situation of the manufacturing industry has declined and the domestic bearing industry has maintained fierce competition in the low end of the homogeneity, the company's business in recent years remains sound. In 2015, the company achieved 302 million yuan in revenue and 65.22 million yuan in net profit. The company's pulley products are participating in the Valeo test, only one durability test has not passed. In the future, it is expected that the pulley products will enter the pre-installation market after passing the Valeo test, and the main industry will open up new growth space.
Wuxi pterodactyl shares into the field of aviation tire renovation, Wuxi pterodactyl has a significant qualification advantage the company will transfer its own funds to Wuxi pterosaur shares in cash and increase the capital by 58.7755 million yuan, after the transaction, the company will participate in the 36% stake in Wuxi pterodactyl. Due to the high barriers to market entry and high industrial concentration, the global market share of aviation tires is 37% for Michelin, 20% for Goodyear, 30% for Bridgestone, and 13% for the rest. Wuxi pterosaur obtained the "maintenance license" of the Civil Aviation Administration of China in 2005, and then successively obtained the contractor approval certificates of Air China, China Eastern Airlines, China Southern Airlines and other airlines, and obtained 19 of the 23 pieces of Boeing Co aviation tires, breaking through the qualification restrictions and having a strong competitive advantage.
The import of aviation tires and the permeability of refurbished tires continued to increase. The annual market of domestic aviation tires exceeded 3 billion. China's aviation tire imports grew at a compound rate of 20.5% from 2002 to 2015. From 2013, the import growth rate of refurbished tires accelerated significantly, with growth rates of 181.7%, 437.4% and 64.3% respectively in 13, 14 and 15 years. In 2015, the import value of refurbished tires in China has exceeded half of the total import value of aviation tires. According to our estimate, the annual domestic tire replacement demand can reach 320,000, and the market size is about 2.6 billion yuan. If factors such as spare parts during each maintenance are taken into account, the market size can exceed 3 billion yuan.
Profit forecast and valuation
We expect the company to achieve income of 316 million yuan, 334 million yuan and 358 million yuan in 16-18 years, net profit of 75.5 million yuan, 85.15 million yuan and 95.91 million yuan, EPS of 0.22,0.24,0.28 yuan respectively, and the current stock price corresponding to PE of 63.0X, 55.8X and 49.6X respectively. Cover for the first time, giving a "cautious recommendation" rating.
Risk hint
Wuxi pterodactyl business development is not as expected; OAP product certification failed.