Main points of investment
The company has high business concentration and strong profitability. The company is a professional domestic manufacturer of rail fastener non-metallic accessories and electronic components accessories. According to the design requirements of high-speed rail equipment, it integrates research and development, production and sales. The core product railway fasteners account for nearly 90% of the income. The gross profit margin is as high as 50%, and the gross profit margin is high.
The policy of the downstream rail transportation industry of the company is always good, and the industrial prospect is broad. As the main artery of the national economy, railway has been paid much attention by the CPC Central Committee and the State Council. Urban rail transit has been paid more and more attention by regional governments because of its great role in improving the quality of urbanization. Important government documents such as "medium-and long-term Railway Network Planning" have made various plans for the rail transportation industry, and the industrial scale will continue to expand and steadily maintain the trend of rapid development.
The urban rail is parallel to the two carriages of the national railway, driving the continuous expansion of the industry. The annual investment in railway construction during the 13th five-year Plan period is expected to remain at a high of 800 billion. It is estimated that in 2020, the operating line of Pudong Railway will be about 120000 km, an increase of 18900 km compared with the end of 2015, with an average annual compound growth rate of 3.48%. The operating line of high-speed rail has increased to 30,000 km, an increase of 10200 km compared with the end of 2015, with an average annual compound growth rate of 8.62%. During the 12th five-year Plan, China's urbanization rate has increased by an average of 1.23 percent a year, and the urban population has increased by 20 million per annum. The 13th five-year Plan will continue to maintain a further growth trend, and the demand side will continue to stimulate urban rail construction. During the 13th five-year Plan period, the investment scale of urban rail is nearly 2 trillion yuan, and the new operating mileage is expected to exceed 3000 km.
The company plans to further expand its production capacity and enhance its R & D capacity. The company's fund-raising projects are mainly used for the construction of new production lines and the establishment of new R & D centers. The company can expand the production capacity under the current situation of high capacity utilization, and further increase the market share of rail fastener non-metallic accessories. At the same time, improve the R & D and design capabilities and technical level, to enhance the company's core competitiveness to lay a solid technical foundation.
Profit forecast and investment advice: we predict that the EPS of the company from 2017 to 2019 will be 0.67,0.75,0.84 respectively. Considering the future demand of the company's products and the company's competitiveness, we think it is reasonable to give the company 25-30 times PE in 2017, with a corresponding price range of 16.75-20.1 yuan. Coverage for the first time, no rating for the time being.
Risk tips: the price of raw materials is rising; downstream demand is lower than expected; product technology research and development is not as expected.