Main points of investment:

Private coal machine leader to expand the second main business of new energy vehicles

The company is a leading supplier of high-end coal machinery equipment based on coal mine comprehensive mining machinery and equipment. The company's shearer business and roadheader business rank first, the strength is strong. In recent years, the fixed asset investment in the coal industry has been greatly reduced, which has a great impact on the company's main coal machinery industry. In the case of the space peak in the coal industry, the company chose the new energy vehicle industry as the strategic direction of the company's transformation, and laid out the new energy vehicle three power and leasing business.

The coal machinery industry has rebounded strongly in the past 17 years, and the boom is expected to last 2-3 years.

The sharp rebound in coal prices will improve the profits of coal machinery enterprises in two aspects: on the one hand, the recovery of cash flow will be accelerated, and the loss of bad debts will be greatly reduced; on the other hand, capital expenditure will increase and the purchase of coal machinery will pick up sharply. We expect that in the next few years, the profit improvement of coal enterprises will continue under the background of the increase of industry production capacity and concentration. This is a strong support for the continuous recovery of the coal machinery industry. In addition, the small summit of equipment upgrading brought about by the peak of coal production capacity between 2009 and 2013 began to appear in 17 years. With the combination of the two, we expect that the demand for fully mechanized coal mining equipment will increase by more than 50% in 17 years. The space of shearer and roadheader industry where the company is located is about 12 billion. After the closure of Jixi Coal Machinery and Jiamusi Coal Machinery Plant, the company's share has further increased and is expected to gain a larger market share in this round of recovery.

Firmly expand new energy vehicles as the second main business, invigorating billion energy electronics is the most interesting point.

The company funded the establishment of Hefei Chuangda in April to introduce a technical team to open the way for the development of new energy vehicles. At present, through the layout of three electricity and operation, the company hopes to make a breakthrough in the special-purpose vehicle market such as logistics vehicles, which is strategically feasible. The company's controlling shareholder, China Coal Machinery Group, acquired a 70.37% stake in Huizhou Yineng Electronics through capital increase and equity acquisition, and promised to give priority to the listed company. BMS is one of the cores of new energy vehicles and is expected to maintain 25 per cent growth in the future. Invigorating Yineng Electronics to play a leading role in the overall layout of new energy vehicles is the biggest attraction in the future.

Risk hint

Coal industry capacity loss risk; coal enterprise equipment renewal is not as expected; M & An integration risk.