Summary:

The company's main business is engineering services. In 2015, the geotechnical engineering market capacity was about 1 trillion yuan, while the company, as an industry leader, had total revenue of 1.93 billion yuan last year, accounting for less than 1% of the total market capacity. Low market share shows that the company is in a scattered industry as a whole, but there is also a broad space for development in the future.

The company's main core business is dynamic compaction business. Since 2014, the company has gradually expanded its business from a single dynamic compaction to the whole industry chain through a series of acquisitions and contributions. At present, the company has formed the integration of business industry chain, and has become an underground space development service provider and contractor with comprehensive service capacity.

In addition, the company also has strong technical advantages in the industry. In the first half of this year alone, the company added two invention patents and 18 utility model patents. At the same time, the company has also participated in the preparation of 17 national and industry standards.

On May 31 this year, the company announced that it intends to purchase 100% equity in the project, 100% equity in theme latitude and 49% equity in Zhejiang Zhongqing in the form of non-public offering of shares and cash payment.

After the completion of this increase, navigation business will also become one of the main businesses of the company. At present, China is rich in low-altitude resources, which has not been effectively developed. The country has issued a series of policies to support the development of the navigation field, and the company will benefit from it.

Earnings forecast: from 2016 to 2018, the company's EPS is expected to be 0.27,0.35,0.44 yuan respectively, and the corresponding dynamic price-to-earnings ratio is 29.8,23.3 and 18.5 times respectively.

Risk tips: 1) market risk; 2) policy risk.