Events:
We have recently conducted a field survey of Saixiang Technology and communicated with the management of the company on the current business situation.
1. Benefiting from the recovery of investment willingness of downstream tire manufacturers, the company's revenue and orders increased significantly last year. The company's revenue in 2013 increased by 48% compared with the same period last year, and existing orders are now abundant, which has been scheduled for the second half of this year. The strong rebound in downstream demand of the company is mainly due to the sharp decline in natural rubber prices in the past two years, the improvement in the profits of tire companies, and the tire industry has entered a new round of investment cycle.
2. The room for improvement in the domestic market is limited, and the company will focus on developing overseas markets in the future. As the domestic tire production capacity has tended to be saturated, and the meridional rate is close to 90%, there is little potential for the industry to increase production capacity. At present, the company's domestic customers are mainly domestic brands, and the next step will be to increase cooperation with Michelin, Bridgestone and other international first-line tire manufacturers to improve the supply scale. In addition, the company will increase the proportion of export business, focusing on India, Eastern Europe and other overseas markets. The company hopes that export revenue will account for 30% of total revenue in the next three years, 2-3 times that of the current one. At present, the gross profit level of engineering radial tire sets of special equipment exported by the company can reach 30%, which is 10 points higher than that in China. In the future, with the increase in the proportion of export revenue, the company's profitability will also improve.
3, to seek cross-disciplinary development, Airbus project to enhance the company's image. In addition to tire manufacturing machinery, the company strives to find new areas to enter. Since 2007, the company has been providing transport fixtures of the A320max 321 model to Airbus final assembly plants in Tianjin, Europe and the United States. Although the future sustainability of Airbus project is uncertain, it will help to improve the company's production management ability and enhance the company's image in the market. In the future, the company will not only expand in the field of aviation equipment, but also continue to look for good development opportunities in automation, complete sets of equipment and other fields.
Investment advice: the company has benefited from the recovery in investment from downstream tire manufacturers, with a substantial increase in newly signed orders, and is expected to continue to grow steadily this year. As the domestic tire production capacity is close to saturation, we believe that the growth space of the tire machinery market is limited, and the company needs to look for new development areas other than tire machinery in the future. We estimate that from 2013 to 2015, the company's EPS will be 0.25,0.31,0.35 yuan respectively, corresponding to 47,38,34 times of PE, giving the "overweight" rating for the first time.
Risk tips: 1. Investment in tire factories declined; 2. The price of raw materials fluctuates greatly.
