We are optimistic that the transformation expectation under the steady background of the company's main business development is gradually opening. We have noticed that companies in the same industry start the process of transformation and expansion with the help of the capital market, so we think that after listing, the company will actively start to expand its main business with the help of the capital platform and start the process of transformation.
The main glassware industry is developing steadily. The company has a production capacity of about 400000 tons of daily glass products, has seven major production bases in the country, and the products are sold all over the country and in more than 30 overseas countries and regions.
The main customers are basically concentrated in well-known wine, food, seasoning, beverage, pharmaceutical industry enterprises, the company implements agent distribution as the main sales model, the country has more than 60 distributor customers and more than 2000 distributors. Historically, the company's main business income has basically maintained a growth rate of 30.4% and developed steadily.
The new fund-raising projects will be put into production, and the growth rate of the company's main business will accelerate in the next 2 years. After the listing of the company, the fund-raising project will be put into production in July 2016. at the same time, the company launched an additional issuance project in October 2015 and completed its offering in July 2016, issuing an additional 630 million yuan to six specific investors, including controlling shareholders, at a price of 35.68 yuan per share. the implementation of construction projects such as Gansu Shidao Glass and Jiangsu Shidao Glass are expected to be completed and put into production within the time period of 2016-2017, under the background of capacity expansion. The company's revenue and profit growth will accelerate in the next 2 years. We expect the company's growth to accelerate from the third quarter of 16.
With reference to similar enterprises, the future focus of the company is still transforming and expanding. Affected by the slowdown in domestic economic growth, the overall growth of the company's main business is mainly stable. However, with reference to other domestic listed companies, such as Deli shares, Song Fat shares, Sitong shares, Cultural Great Wall and other companies, these enterprises are all located in traditional industries and are squeezed by the long-term ceiling of industry development. after listing, they all started the road of transformation and upgrading, such as Dili shares transformation game industry, Songfa, Sitong, Cultural Great Wall and other companies have all transformed to the education industry. We believe that Huapeng, as one of the leading enterprises in the glass industry, does not rule out the expectation of transformation and upgrading in the future.
The target price is 56 yuan, giving a "highly recommended-A" investment rating for the first time. We do not consider the premium brought about by the company's transformation and upgrading for the time being. With the support of the company's main business, it is estimated that the company's EPS in 2016-2018 will be 0.60,0.87 and 1.07 yuan respectively. Reference to comparable targets in the industry, the average PE in 2017 is 65X, corresponding to the target price of 56 yuan, the company's main business development is strong, for the first time given a "highly recommended-A" rating.
Risk tips: rising costs and poor sales of new capacity affect corporate profits, and the progress of transformation is slow.
