Main points of investment
The company is a leading manufacturer of cable materials in China. With six series and more than 200 varieties, it is one of the few cable material manufacturers in China with large-scale production, product serialization and high level of technological innovation. The company's products are mainly special cable materials with special performance, technical content and high added value. In 2014, the company's special cable materials accounted for 75.2% of the revenue.
The demand for cable materials continues to grow, and green environmental protection is the development trend. Benefiting from the transformation of national urban and rural power grids and the construction of UHV power grids, the demand for wire and cable products in China is expected to continue to grow. Cable material is one of the key materials of wire and cable, and the demand will increase with the increase of wire and cable output value. The market demand for cable materials in China is 46.2 billion yuan in 2013 and is expected to reach 60.5 billion yuan in 2017, with an average annual growth rate of 7.0%. With the increasing requirements for the safety of cable under fire, the proportion of traditional PVC cable materials will gradually decline, and the proportion of green cable materials will gradually increase.
The company has technical advantages, product advantages and customer advantages. After long-term technical accumulation and continuous R & D investment, the company has formed a complete formulation system, and participated in the drafting of a number of national standards and industry standards. The company has a rich product structure and a full range of products, taking the lead in the development and large-scale production of halogen-free, low-smoke, flame-retardant polyolefin cable materials and other green cable materials. The company has a large number of high-quality customers and has become the supplier of a series of well-known cable manufacturing enterprises, such as Prysmian, Nixon, Changzhou Lenny, Changzhou Ankite, Sun Cable, Hangzhou Cable, Tongding Optoelectronics and so on. the products are widely used in the cable manufacturing of major stadiums, tunnels, bridges, high-speed railways, scientific research bases and other national key projects that require high product quality.
The fund-raising project will expand production capacity and help to enhance the company's core competitiveness and market share. The number of shares issued by the company is 16.67 million shares, the issue price is 14.84 yuan per share, and the total amount of funds raised is 247 million yuan, which is used in the "annual output of 10000 tons of plastic cable material granule project" and "annual output of 25000 tons of plastic cable material granule project". The project construction period is 18 months. After the expansion project is put into production, it can solve the capacity bottleneck of silane cross-linked cable materials, optimize the company's product structure, and increase the proportion of halogen-free and low-smoke flame retardant cable materials that are environmentally friendly and flame retardant, which is conducive to enhance the company's core competitiveness and market share.
Profit forecast and valuation analysis. We estimate that the company's EPS (dilution) in 2015-2017 will be 0.78,0.89,1.02 yuan respectively. Taking into account the company's industry status, growth, profitability and comparable company valuation, we give the company a valuation of 50-55 times in 2015, corresponding to a reasonable valuation range of 39.0-42.9 yuan.
Risk hints: the risk of downstream demand fluctuations; the risk of increased market competition; the risk that the project schedule is lower than expected