Summary of the report
The company is the absolute leader of domestic wear-resistant materials: the company is the largest manufacturer of wear-resistant ball section in Asia and the second largest in the world, with a production capacity of 85000 tons. The company's products are widely used in metallurgical mines, building materials, cement, thermal power generation and other industries, and exported to more than 20 countries and regions, long-term cooperation customers more than 500, including large central enterprises and the world's top 500 enterprises.
Benefiting from the pick-up in downstream demand, it is expected to meet the performance inflection point: 2017H1 achieved revenue of 181 million, an increase of 44.07% over the same period last year, benefiting from the rebound in demand from downstream mining, cement and other industries. Due to the rise in raw material prices, the company's net profit is still at a loss, and the company will increase the price of its products in the second half of the year to cover the impact of rising costs. We judge that the company's wear-resistant materials business will meet the performance inflection point.
The steady progress of the acquisition of majestic Seiko will greatly increase the company's profits: Xiongwei Seiko mainly specializes in automobile stamping parts and has outstanding mold R & D and design capabilities. downstream customers are mainly Yanfeng Johnson, Boze, Foggia, Takata, Magna and other world-famous auto parts manufacturers. 2017H1 majestic Seiko achieved an income of 420 million, a net profit of 86.64 million yuan and a gross profit margin of 32.76%. In the future, majestic Seiko is expected to expand more quality customers with the help of the platform of listed companies. At present, the company's private placement plan has been approved, waiting for approval to be issued.
Profit forecast and investment advice: excluding the acquisition of majestic Seiko for the time being, we expect the company's revenue from 2017 to 2019 to be 430 million, 494 million and 544 million respectively, and its net profit to be 4.09 million, 23.04 million and 35.42 million respectively. In addition, it is expected that the net profit of Xiongwei Seiko in 2017-2019 is 170 million, 190 million and 210 million, respectively. Taking into account the company's leading position in the field of wear-resistant materials and the acquisition of majestic Seiko will significantly increase the company's performance, upgraded to the "buy" rating.
Risk hint: the acquisition of majestic Seiko is not as good as expected.
