What happened: the company disclosed the application of its products in the consumer electronics industry in its recent investor relations activity record sheet. The materials used in mobile phones are mainly aluminum and stainless steel composites, which are mainly used in the metal back cover and middle frame of mobile phones. Now it has cooperated with major domestic mobile phone manufacturers such as Huawei, OPPO, XIAOMI, Meizu, etc., and has been used in bulk on some models of Huawei NOVA II Plus.
Viewpoint:
Large orders ensure the steady growth of aluminum alloy heat transfer business. The company is the leader of brazed aluminum alloy and aluminum-based polymetallic composites in China. at present, the main products aluminum alloy heat transfer materials deep cooperation the global automotive heat exchanger market share of the giant Valeo, Mahler, in early 2017 even signed with Valeo during the 2017-2021 period of 3.76-425 million yuan per year, the total price of about 2 billion yuan supply contract Compared with the five major customers a few years ago, the sales income of Valeo is about 1-150 million yuan, which fully ensures the stable growth of the company's traditional heat transfer business in the next few years. At the same time, the company is the only aluminum and steel compound material batch production enterprise in the domestic power plant air cooling field, and the business income scale of this part has gradually become stable in recent years.
The inflection point of aluminum-based polymetallic composites in the field of home appliances and consumer electronics may be coming. According to the company's disclosure information, the company's aluminum and steel composite has entered the major domestic mainstream household appliance brands, aluminum and stainless steel composite has been successfully put into Huawei NOVA II plus batch production model, and currently has cooperation with major domestic mobile phone manufacturers such as Huawei, OPPO, XIAOMI, Meizu, etc., we believe that the company's subsequent cooperation in the field of consumer electronics will open an era of explosive growth of aluminum-based polymetallic composite business. At present, it may be at the strategic inflection point before the outbreak.
It is optimistic about the application expansion of the subsidiary Fei'erkang 's 3D metal printing business in the military and civil fields. The company's aluminum alloy 3D printing parts have the advantages of lightweight, fast delivery and no additional cost. at present, it is the only metal 3D printing supplier of Comac C919, providing 31 aluminum alloy 3D printing metal parts for C919 fuselage. Comac received 130 orders for C919 on the first day of the 17th Beijing Air Show, bringing the cumulative order for domestic C919 to 730, the Civil Aviation News of China reported. In the future, with the role of the only metal 3D printing supplier of C919, it is expected that the C919 will be released quickly after mass production. At the same time, 3D metal printing has a wide range of applications in the field of military aerospace. At present, 1-2 military projects have entered mass production, and the volume is expected to be released in the future.
Aluminum alloy cladding actively expands the field of military armor protection. The company's aluminum alloy cladding can be used for lightweight and bulletproof protection of ground equipment, cooperate with many relevant military research institutes / schools, participate in the research and development of several new equipment, and some products have been shipped in small quantities. The company's military armored defense business is mainly undertaken by the subsidiary Yinbang Defense, with revenue of 4 million yuan / YoY (+ 54%) in 2016 and 2.95 million yuan in the first half of 2017. We believe that the company will fully benefit from the environment of deep civil-military integration, and with the conclusion of the new equipment research and development project and the verification of small batch delivery of some products, the military armored protective composite materials have great potential in the future.
Conclusion:
We expect the company's operating income from 2017 to 2019 to be 2.017 billion yuan, 3.115 billion yuan and 3.956 billion yuan, net profit of 99 million yuan, 289 million yuan and 430 million yuan respectively, and earnings per share of 0.12,0.35 and 0.52 yuan, corresponding to PE of 93x, 32x and 21x. Coverage for the first time, giving the company a "highly recommended" investment rating.
Risk Tips:
Traditional business fell; consumer electronics and military business fell short of expectations.