Main points of investment:
Leading enterprises of glassware and glass bottles and cans. The company is a leading enterprise in the glassware and glass bottle and jar industry. in 2015, the company's operating income was 726 million yuan, an increase of 2.95% over the same period last year. The income of glass bottles and jars and glassware accounted for 77% and 22% respectively, and the income structure remained basically stable in recent years.
The development of the industry is stable and the market space is considerable. In recent years, the glass products industry has entered a period of steady growth. The global demand gap has exceeded 2 million tons every year in recent years, and it is expected that supply will remain in short supply in the future.
The safe and green characteristics of glass bottles and cans make them have a huge market alternative space. At present, the consumption level of daily glass in China is low, and the daily glass products are mainly in the middle and low end, which still lags far behind the mature markets in Europe and the United States. Income growth will bring consumption upgrading and considerable market opportunities.
The competitive advantage of leading enterprises is obvious. The company is the leader of domestic glass bottle and glassware industry, and has obvious advantages in scale and industrial layout, customer and market network, technology and equipment integration, brand and so on. The company has seven production bases in Shandong and other six provinces, and its products are sold in all parts of the country and more than 30 countries and regions overseas. it has more than 60 distributor customers, more than 2000 distributors and many well-known enterprise customer resources. in cooperation with many colleges and universities, we have more than 30 product patents.
Key projects to enhance the competitiveness of enterprises. The company was listed in 2015, and IPO raised 230 million yuan to invest in technical renovation and glass projects, among which Heze technological renovation project produces new materials. In July 2016, the private placement raised a total of 630 million yuan, which was invested in Gansu and Jiangsu high-end lightweight glass products after deducting the issuance expenses. It is expected to be put into production in 2017. Considering that the purchase of major equipment has been completed in the previous period, the project itself has a higher profit margin. By raising funds, the company will have room for growth in the next two years, and revenue growth is expected to accelerate in the future as the project goes into production.
The bottleneck of traditional manufacturing industry has the expectation of transformation. In recent years, China's traditional economic development model has encountered bottlenecks and the growth of the traditional manufacturing industry is weak. Many enterprises, such as Deli shares and the Great Wall of Culture, have begun strategic transformation in order to seek new growth points. The company is facing a similar industry situation, while maintaining the soundness of the main business, it is possible and feasible to seek new growth points, such as the layout of emerging industries. We believe that the company has the possibility of strategic transformation in the future.
Profit forecast and investment advice. The company's main business is sound, and it will be more competitive after its listing in 2015. The company completed private placement in 2016, major fund-raising projects began, is expected to be put into production in 2017, and the performance will accelerate in the next few years. Based on these judgments, we predict that the company's homing net profit from 2016 to 2018 will be 56.56 million yuan, 63.92 million yuan and 74.23 million yuan, corresponding to EPS0.46 yuan, 0.52,0.6 yuan; considering that the company has stable downstream customers and is expected to release production capacity and improve performance in the next two years, in view of the large-scale transformation of emerging industry direction of similar companies in the same industry, this possibility also exists in the future. We value the company at 105 times PE in 2016 and give it an "overweight" rating corresponding to the target price of 48.3 yuan.
Risk hint. The progress of the company's fund-raising projects is not up to expectations, and the development of the industry is lower than expected.
