The company is a leading manufacturer of industrial lubricating oil products in China. The company is one of the earliest private enterprises in China to produce and sell industrial lubricating oils. after years of production and technology accumulation, the company is rich in products, covering most of the industrial lubricating oil products in the market at present. and the technical level and product stability are leading in China. The company's main products transformer oil accounts for about 11% of the total domestic demand, while vigorously developing internal combustion engine oil, hydraulic oil, gear oil and other products, is a leading domestic industrial lubricating oil manufacturer.
High-quality lubricating oil and packaging oil is the development trend of the industry. Due to the improvement of the level of manufacturing equipment, a large number of precision and automation equipment need high-quality lubricating oil to ensure its effective operation, and the country vigorously promotes the concept of "reasonable lubrication" and advocates reducing all kinds of improper loss through high-quality lubricating oil products. to improve economic efficiency, high-quality lubricating oil will gradually replace the original low-end products. With the development trend of automation and precision of industrial machinery and equipment and the requirements of regular vehicle maintenance, the degree of subdivision of lubricating oil products is improved, which promotes the consumption of packaged lubricating oil products. We believe that high-quality lubricants and packaging oil will be the development trend of the industry.
The company has strong R & D strength, perfect product structure and high-quality customer resources. The company has a number of R & D institutions, outstanding product development capabilities, can launch a number of new specifications of products every year to meet the individual needs of customers. Compared with domestic competitors, the company has a complete product structure and can provide customers with perfect product system and omni-directional lubrication technical support. In addition, after years of operation, the company has accumulated a number of well-known corporate customers, such as Tianwei Wuzhou, Xugong Group, Zoomlion Heavy Industry Science and Technology, WACKER Chemical and so on. The level of purchasing customers of the company has improved year by year, the number of large end users is increasing, and the high-end market is constantly expanding, which promotes the rapid development of the enterprise.
Fund-raising projects help to enhance the core competitiveness of the company. The number of shares issued by the company is 22.3 million shares, the proposed issue price is 8.50 yuan per share, the total amount of funds raised is 190 million yuan, and the net amount is 166 million yuan. it is used for "annual output of 60,000 tons of high-quality lubricant project", "enterprise R & D center construction project", "marketing and after-sales service network construction project", the project construction period is 12 months. After the completion of the fund-raising project, the company will add 60,000 tons of high-quality lubricant production capacity, which will help to improve and enrich the company's product line, optimize product structure, and ensure the company's sustainable profitability in the future.
Profit forecast and valuation analysis. We estimate that the company's EPS (dilution) in 2015-2017 will be 0.42,0.49,0.71 yuan respectively. Taking into account the company's industry status, growth and profitability, we will give the company a valuation of 35-40 times in 2016, corresponding to a reasonable valuation range of 17.15-19.6 yuan.
Risk hints: the risk of low demand downstream; the risk of raw material price fluctuations; the risk that the construction progress of the fund-raising project is lower than expected.
