Core view: The company is a leading domestic bimetal band saw blade enterprise and is at a leading level in terms of capital strength, product quality, and market position. As a leading brand in the domestic bimetal band saw blade industry, the company is expected to use the capital market to achieve healthy and steady growth, driven by a gradual increase in domestic market share and rapid breakthroughs in overseas markets.
The profitability of bimetallic band saw blade faucet manufacturers continues to increase. ① The company has been deeply involved in the industry for many years, undertakes the formulation and revision of industry and national standards, and has an outstanding position in the industry. ② Profitability has been significantly enhanced, and it is expected that capital markets will be used to achieve leaps and bounds. After the IPO, the company's capital strength and management efficiency increased significantly. Revenue and profit increased 22.47% and 30.68% year-on-year in 2017, with clear signs of acceleration.
The import substitution cycle has begun, and the domestic market pattern is expected to be further optimized. ① As industrial consumables, bimetal band saw blades have a wide range of downstream applications and broad market space in the industry. ② The import substitution cycle has begun. As a leading brand in the domestic industry, the product quality is excellent and benefits deeply; while promoting import substitution in the domestic market, the company is participating in global competition to obtain a broad overseas market. ③ The domestic CR3 market share is about 52%. In line with the current situation where Renault in the US, Vikus in Germany, and Amada in Japan all have a market share of more than 50% in the domestic market, the company is expected to lead and benefit from the process of increasing domestic industry concentration.
Product and production capacity are achieving double breakthroughs, and medium- to long-term profit margins have been effectively increased. ① Under the corporate mission of “making the world free of difficult materials”, the company is expected to achieve breakthroughs in high-end products and diversification of categories: on the one hand, it will expand from band saw blades to other cutting fields, and on the other hand, increase the proportion of high-end products such as tungsten carbide saw blades and increase the company's room for growth. ② With the launch of fund-raising projects, the company's production capacity is expected to increase rapidly, its leading position is expected to be further consolidated, and its profitability will increase significantly.
Investment advice: The company's revenue for 2017-19 is expected to be 305, 369, and 460 million yuan, up 22.6%, 20.7%, 24.7% year on year, and net profit of the mother was 0.53, 0.69, and 92 million yuan, up 29.64%, 30.20% and 32.89% year on year. Corresponds to EPS 0.38, 0.49, 0.65 yuan, PE46, 35, 26X. First coverage, recommended rating.
Risk warning: The national economy is declining, and the market competition pattern worsens.