I. Overview of events
Recently, we conducted a survey on Jinshi Dongfang and communicated with the management of the company on the company's business situation and future development strategy. The growth rate of the company's main business is expected to stop falling and stabilize. Thanks to the construction of urban integrated pipe networks and the three rounds of debt swaps this year, we estimate that the EPS for 15-17 years will be 0.69,0.85,1.04 yuan respectively, giving a "strongly recommended" investment rating for the first time, with a reasonable valuation range of more than 70 yuan.
II. Analysis and judgment
Construction of comprehensive pipe network in beneficiary cities
With steady growth in the second half of the year, the State Council has recently deployed the construction of urban underground comprehensive pipe corridors, and China will comprehensively start the construction of underground comprehensive pipe corridors, which is expected to be included in the 13th five-year Plan. Companies can benefit from trillions of investment in each of the next three to five years. The company's share price fell deeply with the sub-IPO plate, so it rediscovered that its industry plate is of great value and is one of the most flexible varieties in the secondary IPO, with more room for growth in the future.
The market space is huge, and the future development is not limited.
The reinforced composite pipeline produced by the company's products and equipment has the advantages of good quality and low price compared with the traditional water supply and drainage pipeline. At present, the market of plastic water supply and drainage pipes is more than 20 billion, the share of reinforced composite pipes in plastic drainage pipes is increasing by 10% year by year, and more than 80% of reinforced plastic composite pipes are produced by company equipment. In the future, with the increase of the share of plastic pipes in water supply and drainage, the company's equipment market space has a growth rate of more than 50%. In the future, the company will enter the equipment product research and development in the field of industrial composite pipeline, and the market space is huge.
Pipeline production line solution provider with industrial 3.0 characteristics
The company's main business is the research and development and application of steel reinforced plastic composite pipe equipment, providing customers with a complete set of production process, technical solutions and complete sets of production equipment (production line). The company has a deep accumulation in the automation production line, with the ability to provide automation equipment solutions, is actually a pipeline industry automation solution provider, with industrial 3.0 characteristics.
Leading in the world, perfect protection of patent cluster
The technical capability of the company is the leading in the world, and the equipment is sold to the patent cluster where the company has the cooperative protection of core patents and peripheral patents. When considering whether to carry out technological research and development in a certain field, we mainly consider the following aspects: 1) whether there is a market prospect; 2) whether a patent can be formed; 3) whether raw materials can be obtained; 4) whether a patent can form a mesh protection.
The third round of local debt swap drives downstream demand
The amount of the third batch of debt swaps of the Ministry of Finance will be close to 1 trillion yuan, which will be very helpful to improve the capital situation of downstream manufacturers, while the recovery of real estate and infrastructure will also increase downstream demand.
Third, risk tips
Risk hint: the overall economy continues to decline and industrial development is lower than expected.