This report is read as follows:
After the adjustment period, the operation of the company has appeared an inflection point, and the domestic components and super-power frequency conversion market have broad space, which has become the driving force of long-term transformation, and has contributed significantly to the performance since 2014, covering the target price of 5 yuan for the first time and increasing its holdings.
Main points of investment:
For the first time, it covers the rating of "increasing holdings", with a target price of 5 yuan. We believe that there has been an inflection point at the operating level of the company. The recovery in 2013 is obvious, and the volume of new products will be released from 2014. It is estimated that the EPS for 2013-15 will be 0.08 pounds 0.20 pounds 0.34 yuan, with an average annual compound growth rate of 99 percent (while the distribution network industry is booming while enjoying new business results), with a target price of 5 yuan, corresponding to 25 times PE in 2014.
2013 is the year of transformation and recovery. After years of in-depth cooperation with GE, Honeywell and other foreign-funded enterprises, we believe that the company is a distribution network primary equipment enterprise with obvious advantages in technology, market, production and technology. After the sudden death of the chairman, the company fell into a deep adjustment in 2012, and the current management organizational structure has been straightened out, and the new strategic direction of new business, localization, emphasis on cash and laying channels ensures the longer-term development of the company. a large number of management shareholdings and business backbone equity incentives have also regained centripetal force, and orders and performance have obviously picked up in 2013.
Since 2014, it has entered the harvest period: self-made components with high gross margin of new business and ultra-high power frequency conversion capacity. The company has moved from borrowing foreign capital to independent domestic production, and the early product research and development, capital expenditure and channel laying are coming to an end. Autonomous components and ultra-high power frequency conversion will be released from 2014, becoming the incremental engine driving the company's long-term development. The market capacity of high-end components and ultra-high-power frequency conversion is about 30 billion and 25%, both of which are occupied by foreign investors, and there is broad room for import substitution in the future. Assuming that the company's market share reaches 3% and 25% respectively (only 2 domestic enterprises), the growth ceiling will be broken. The gross profit margin of the new product is as high as 40%, which is much higher than the 25% of the company as a whole, which will significantly boost the performance.
Catalyst: distribution network construction planning, independent components release, west-to-east gas transmission bidding, Nanqiao land appreciation.
Risk factors: the risk of instability in management personnel and the uncertainty of the new business development process.
