Main points of investment
The company's cable products are mainly sold to the power industry.
The company's main business is the production and sales of wire and cable materials and connectors, and downstream customers are concentrated in power grid companies and power generation groups, as well as customers in other industries such as petroleum and petrochemical. According to the disclosed performance of KuaiBao, the company's revenue in 2013 was 4.398 billion yuan, an increase of 134.06% over the same period last year, and the net profit belonging to shareholders of listed companies was 166 million yuan, an increase of 208.50% over the same period last year. The increase was mainly due to the consolidation of newly acquired subsidiaries at the end of 2012.
Expand business scope and increase scale and market share through integration of mergers and acquisitions
Due to the decline in the growth rate of electricity consumption and the decline in the growth rate of power investment, the cable industry has also been in a recession in the past two years because of overcapacity. Therefore, at the beginning of 2012, the company put forward the development goal of "in the next two or three years, the company plans to take the capital market as the platform, take acquisition and merger as the means, optimize the allocation of enterprise resources and speed up the adjustment of product structure". In 2012, the company completed the acquisition of Pearl Cable, remote Cable and Xizhou electromagnetic Wire through a non-public offering, expanded the company's business in power cables, military cables, mining cables and electromagnetic wires, and improved the company's product structure. it also enhances the overall competitiveness. We believe that the scale of the cable industry is large, but the industry concentration is low, and it is especially suitable for industry consolidation and merger in the current depressed stage of the industry. Most listed companies belong to enterprises with good scale and texture in the industry, and have more advantages in financing. Therefore, as a platform for integration and mergers and acquisitions is promising. In addition, due to the early determination of the development goal of integrated M & A, and through the last large-scale M & A, the company has accumulated experience in handling cases, so it has a relative first-mover advantage.
The progress of graphene cable is worthy of attention.
Recently, the company announced the establishment of Zhongchao graphene Power Technology Co., Ltd. in a joint venture with Jiangnan graphene Research Institute, Xi'an Jiaotong University Technology transfer Co., Ltd., and Changzhou sixth element material Technology Co., Ltd. the joint venture company will carry out application research and industrialization promotion of graphene materials in the field of wires and cables. Graphene has excellent electrical conductivity, good mechanical properties and thermal conductivity. the cable made of this material can obviously reduce the resistivity of polymer semiconductor materials and greatly improve the effect of homogenizing electric field. the service life and operation reliability of the cable will be greatly improved. We believe that the joint venture company has the background and capability of R & D and manufacturing, and the maturity of technology and the improvement of customer recognition in the future will determine the progress of large-scale promotion of graphene cable.
Profit forecast and valuation
We forecast that the EPS of the company from 2014 to 2015 will be 0.36,0.39, respectively, and the PE corresponding to the closing price on March 7 will be 24.3 and 22.4 times respectively, giving the "neutral" investment rating for the first time.
Risk hint
1, the risk that the effect of M & An integration is lower than expected; 2, the risk of brain drain.