Large and medium-sized customized motor leader, profitability is gradually restored. The company is the leader of domestic private large and medium-sized motors, mainly in customized mode to produce large and medium-sized DC motors, medium and high voltage AC motors and generators and other motor products. 2017H1 achieved an operating income of 136 million yuan, an increase of 21.86% over the same period last year, and a net profit of 18 million yuan, down 3.64% from the same period last year. In the field of large and medium-sized customized motors, with the active capacity removal of the downstream industry, the company is also in the process of passive capacity removal. During the industry downturn, the company insists on the main industry and constantly asks for demand from emerging downstream industries and overseas markets. Seek to consolidate its leading position in the field of large and medium-sized customized motors.
Vigorously expand new customers of wind turbines, wind turbine business has become a new source of profit. The company's current wind turbine products mainly include 2MW, 3MW, 6MW and other series, of which 3MW is the main. In addition to the original old customer Sinovel Wind Power, the company has vigorously expanded Mingyang Wind Power, Vision Energy and other new customers in the first half of the year. Among them, Mingyang Wind Power has achieved order delivery, and we expect the order volume for the whole year of 2017 to exceed 30 million. Overall, we expect the company's wind turbine business to exceed 50 million in 2017, making it an important part of the company's business.
The traditional large and medium-sized motor business is limited by downstream demand, and the gross profit margin has declined. As the downstream of the company's large and medium-sized motors are mainly steel rolling, mineral, cement and other industries that are being affected by "capacity removal" and environmental protection policies, the company's traditional large and medium-sized high-voltage motors shrank in the first half of 2017 due to the shrinking demand downstream. On the whole, it is in a more difficult period. Affected by shrinking demand, the company's overall sales gross margin fell 5.08 pct in the first half from the previous month.
Continuously sign large orders in India and vigorously expand overseas markets. On August 15, 2017, the company announced that it signed a contract for India's FFC flood control irrigation project with Navayuga Engineering Co., Ltd., with a total of 24 motor units at a total price of US $2685. On September 29, 2017, the company once again announced that it had signed a contract with RVR Engineering Co., Ltd. for India's ChintalapudiII irrigation water lifting project, with a total contract price of US $1070.
Profit forecast: the company's semi-annual report in 2017 put forward a high transfer plan of 10% increase in capital reserve. Taking into account the company's leading position in large and medium-sized customized generators, the steady expansion of wind turbine business scope and the successful development of overseas markets such as India, we estimate that the company's EPS in 2017, 2018 and 2019 will be 0.413, 0.509 and 0.549 yuan respectively, giving it a "prudent recommended" investment rating for the first time.
Risk tips: the demand for large and medium-sized electrical machines is shrinking rapidly; the demand for wind turbines is shrinking faster than expected; and the settlement progress of water conservancy projects in India is lower than expected.