For the first time, it was given a rating of "prudent overweight", with a target price of 13.35 yuan.
The company is a leading enterprise of TV structural parts, with excellent manufacturing foundation, and is now transforming from household appliance structural parts to TV machine and automobile structural parts. We expect the growth rate of the color TV and white TV industry to decline to a steady state in the next three years. Under the circumstances of high internal and external pressure, we believe that the company still has a lot of room for improvement in internal incentives and business development in the future, and we look forward to transformation. We estimate that the EPS in 2015-17 will be 0.11,0.13,0.15 yuan, so it is reasonable to give the company 1.5 times PS in 2015, corresponding to a market capitalization of 5.35 billion yuan and a target price of 13.35 yuan. For the first time, it was given a "cautiously overweight" rating.
Great external pressure, manufacturing of transformational automobile structural parts and TV sets
The downstream industries of the company, such as television, white electricity and automobile, have all entered a mature period and the growth rate of the industry has slowed down. At the same time, the downstream competition pattern is stable, squeezing the interests of upstream enterprises more and more, we believe that the profit margins of upstream enterprises will be further reduced in the future. In the face of external pressure, the company is also actively exploring the way of transformation, including the transformation of TV structural parts to TV machine manufacturing and the expansion of automobile structural parts. The new business has made some progress in recent years, but it still accounts for less than 20% of the company's total revenue. We look forward to expanding the business with broader growth prospects outside home appliances and automobile structures in the future.
Internal incentives are expected to improve, and controlling shareholders are expected to benefit more as financial investors.
The company has not yet implemented the equity incentive plan and employee stock ownership plan, with the exception of the chairman / general manager Ding Jinduo indirectly holding a small amount of equity, other senior executives, middle managers and core technical personnel do not hold shares in the listed company. Controlling shareholder Guangzhou Gaojin, as a financial investor, reduced its shareholding to 26 per cent from 43 per cent when it went public in 2010, cashing out a total of 410 million, but Yichang contributed a low rate of return compared with other holding companies it reduced its holdings. We expect that the controlling shareholders still have expectations for the future development of the company, through improving internal incentives to improve performance and market capitalization or other ways.
Key risks: the growth rate of the home appliance industry is declining, and the direction and timing of the transition are uncertain.