Main points of investment:
The prosperity of traditional business has rebounded. The company's traditional business is coal mine safety supervision products, the prosperity of the industry declined in previous years, accounts receivable seriously affected profits and restricted the expansion of business. Over the past year, the state has implemented supply-side reform, coal prices have risen, industry profits have increased, and demand for coal mine safety supervision products has rebounded. Income in the first half of the year has increased by 17.64%, reversing the decline, and the follow-up is expected to continue to benefit from the landing benefits of relevant national policies.
The prospect of rail transit plate is broad, and new products are launched steadily. Fuhua Yuqi, a holding subsidiary, specializes in communications products, transforming from the coal mine field to rail transportation and military informatization. In recent years, the annual investment in the field of rail transit informatization is 10 billion yuan, and it will maintain a compound growth rate of about 10% in the next decade. Fuhua Yuqi's train communication network products lead the industry, and the market share of ordinary train supporting products ranks first. The first matching application of high-speed train standard bullet train "Fuxing" has been realized, and it will fully benefit from the follow-up development of rail transit boom. At the same time, with the help of the company's new layout of military resources, achieved a breakthrough in the transformation of military communications, the scale of business is expected to be further expanded.
The prospect of rail transit plate is broad, and new products are launched steadily. Fuhua Yuqi, a holding subsidiary, specializes in communications products, transforming from the coal mine field to rail transportation and military informatization. In recent years, the annual investment in the field of rail transit informatization is 10 billion yuan, and it will maintain a compound growth rate of about 10% in the next decade. Fuhua Yuqi's train communication network products lead the industry, and the market share of ordinary train supporting products ranks first. The first matching application of high-speed train standard bullet train "Fuxing" has been realized, and it will fully benefit from the follow-up development of rail transit boom. At the same time, with the help of the company's new layout of military resources, achieved a breakthrough in the transformation of military communications, the scale of business is expected to be further expanded.
The industrial fund operates smoothly, ensuring continuous extension of high-quality projects, managing efficiency and protecting performance, and equity incentives to stimulate vitality. The company set up a military-civilian integration industry fund in Xi'an, basically completed the investment in a communication, navigation, measurement and control company in the first half of the year, and has a number of pre-reserve projects, which will be gradually landed with all the work in the second half of the year. The company pays attention to operating efficiency, strictly implements screening in traditional business areas, avoids projects with weak profits and long payback cycle; at the same time, it optimizes the internal management process and strictly reduces costs and increases efficiency, which has a positive effect.
Profit forecast and investment rating: buy rating is based on the company's traditional business recovery, track and military business prospects, coverage for the first time, give buy rating. It is estimated that the net profit from 2017 to 2019 is 73 million yuan, 108 million yuan and 142 million yuan respectively, and the corresponding EPS is 0.11,0.16,0.21 yuan respectively, and the corresponding share price PE is 78 times, 53 times and 41 times respectively.
Risk hints: 1) performance is lower than expected risk; 2) the reform intensity and progress of the coal mining industry is not as expected; 3) military orders are not as expected; 4) the construction progress and investment scale in the field of rail transit are not as expected.