Summary of the report:
The company is the leading enterprise of domestic self-propelled grain combine harvester. The company relies on its differentiated competitive advantage, and its products are highly recognized by the market with high applicability and reliability. the market share of the company's products is more than 10%, second only to foreign capital or joint ventures such as Benjiuda, Jiangsu Wade and Shandong Futian Leiwo. The products have covered the rural markets of 24 provinces, municipalities and autonomous regions across the country.
The company will benefit from the improvement of domestic agricultural mechanization rate and domestic production rate. China's agricultural mechanization rate obviously lags behind Europe, the United States and other developed countries, at the same time, most of the middle and high-end products in China's agricultural machinery industry are still mainly imported. In the future, with the continuous promotion of land reclamation reform, the intensive management of agricultural land will promote the demand for large-scale agricultural machinery, and the harvest level of some subdivided areas such as corn and cotton will be improved. In addition, agricultural machinery equipment is one of the top 10 key areas of "made in China 2025", which has been determined to increase the market share of domestic medium and high-end agricultural machinery.
The company has obvious advantages in technology and channel. The company can maintain its share in the industry in recent years, not by its price advantage, but by the applicability and reliability of its products. The company's long-term technology accumulation in the agricultural machinery industry provides it with barriers. In addition, the company has more than 250 dealers throughout the country, forming a market demand-oriented, fast and efficient market response mechanism.
Vertical expansion of product categories is the current development direction. In the future, while continuously improving the product quality of harvester, the company will carry out research and development in machines such as crawler self-propelled rotary tiller, high-speed seated rice transplanter and self-propelled straw pressing machine. with the company's existing rice-wheat combine harvester to form a product series of integrated operations such as ploughing, planting, harvesting and straw recovery.
Investment suggestion and rating: China's agricultural mechanization still has a long way to go. We believe that in addition to consolidating the market share of existing products, if the company can cut into some subdivided areas with a low degree of mechanization by means of talent introduction, extension mergers and acquisitions, the future will be broad. We estimate that the company's EPS from 2015 to 2017 will be 0.51,0.61,0.72 yuan, corresponding to the price-to-earnings ratio of 64.01,53.55,45.42 times for 2015-2017, giving the "overweight" rating for the first time. Risk hints: the macro-economy remains in the doldrums; the price drop exceeds expectations due to the intensified competition in the agricultural machinery industry; and the expansion of the company's product categories does not meet expectations.