Main points of investment:
Events: according to the company's investor relations activity records on September 20 and September 21, the company's aluminum and stainless steel composites are mainly used in mobile phone metal back covers and middle frames, and now it has cooperated with major domestic mobile phone manufacturers such as Huawei, OPPO, XIAOMI, Meizu, etc., for example, aluminum and stainless steel materials have been used on some models of Huawei nova 2 plus. In addition, the company's aluminum alloy heat transfer materials are supplied to new energy automakers, including Tesla, Inc., through Valeo, Sanhua, Baling Technology and so on.
Comments:
Civil materials business: consumer electronics + new energy vehicles drive downstream demand. In terms of consumer electronics, according to Phoenix Technology, Huawei, OPPO, VIVO and XIAOMI combined estimated mobile phone shipments of 460 million units in 2017 and 540 million units in 2018. In terms of new energy vehicles, according to the medium-and long-term Development Plan of the Automobile Industry of the Ministry of Industry and Information Technology, the volume of new energy vehicles in China will reach 2 million in 2020. According to the China Industry News, the total planned sales of new energy vehicles in the field of new energy vehicles by global automakers will reach 57-8.2 million by 2025. We believe that as the company's products are used in mobile phones and new energy vehicles, the downstream demand market for civilian products is broad, while benefiting from IPO investment projects to release production capacity and improve product gross profit margin and daily operating efficiency, we are optimistic about the future development of civilian materials business.
Military material business: the military aluminum alloy market has great potential, and the inflection point of the company's military business is approaching. Aluminum alloy / aluminum matrix composite is one of the key materials in the military field, which plays an important role in the lightweight and strong protection of army equipment and the weight reduction of navy / air force equipment. Since 2014, the company has cooperated with relevant military research institutes and participated in the research and development of several new equipment, and some products have been shipped in small batches. at present, the company has completed all relevant qualification certification and promoted the military business with the subsidiary Yinbang Defense as a platform. According to the semi-annual report, some of the company's military projects are expected to receive bulk orders this year, and it is believed that some military products will soon enter the stage of bulk supply. We believe that the inflection point of the company's military business is approaching, and the follow-up is worth looking forward to.
3D printing business: the key to the innovation of 3D printing military equipment manufacturing technology, while civilian products are widely used, it is optimistic that the company will participate in sharing the broad market in the future. 3D printing is the key to the future military manufacturing innovation, which has been used in J-20, J-31, Y-20 and other military aircraft and aviation turbofan engines; at the same time, it is widely used in civil aviation, medical and many other civilian fields. Subsidiary Fei'erkang is a leading metal 3D printing company in China, a leading international supplier of titanium alloy powder, a qualified batch supplier of Comac's official 3D printing parts, and the only supplier of 31 metal 3D parts on C919. We believe that 3D printing in China will develop rapidly in the next few years, and the market size is expected to reach 300-45 billion yuan in 2020. at the same time, C919 has so far accumulated 730 orders. the company's 3D printing-related business is expected to participate in the vast market.
Complete two periods of employee stock ownership and be optimistic about encouraging the company's long-term development. The company formally completed the second phase of the employee stock ownership plan in June 2017, with a total of 133 core and backbone employees, funded by employees themselves. Buy 18.083 million shares of the company (accounting for 2.20% of the company's total share capital) at an average price of 8.898 yuan per share. We expect that the employee stock ownership plan will form a long-term and effective incentive and restraint mechanism to fully mobilize the enthusiasm and creativity of employees, and better promote the long-term and stable development of the company in the future.
Profit forecast and investment advice. It is estimated that the EPS of the company from 2017 to 2019 will be 0.24,0.42,0.55 yuan respectively. Combined with the valuation of the comparable company, the company will be given a buy rating of 60 times PE in 2017 with a target price of 14.40 yuan.
Risk hint. (1) the uncertainty of military orders; (2) the intensification of competition in the civilian market; and (3) the cost control of aluminum materials is not as expected.