This report is read as follows:
As the 18-year wind farm operation enters the harvest period, the company's performance growth is expected to improve gradually.
Main points of investment:
Overwrite the overweight rating for the first time. Considering the growth of the company's main business, the operation of the wind farm and the improvement of the gross profit margin of the new energy business (not considering the proposed acquisition of 75% stake in Changyuan Electronics), we expect the company's net profit in 2017-19 to be 1.59,3.37 and 421 million yuan. the year-on-year growth rate was 48.4%, 111.5% and 24.9%. Corresponding to 2017-19 EPS0.13/0.27/0.33 yuan. With reference to the average valuation of the industry, based on the principle of prudence, the company is given 24 times PE in 2018, corresponding to the target price of 6.48 yuan, covering and increasing holdings for the first time.
Wind power operations significantly improve performance growth expectations. 1) the operation of the company's wind farm in 2018 has entered the harvest period, and the quarterly report in 2018 predicts a year-on-year increase of 100% and 150%, mainly due to the formal operation of Shandong Laixi Hetoudian and Dongdazhai Wind Farm. 2) Zero loan ratio and higher offshore wind power utilization hours bring the company a higher wind power operating rate of return. According to our calculation, the net interest rate of the company's wind power station will reach 67% in three years after it is put into operation. 48.6 MW installed capacity will bring a net profit of about 90 million yuan per year.
The company is expected to replicate the development model of overseas giant Tyco Electronics. Heat-shrinkable materials are the core assets of the three major businesses of Tyco Electronics. The AMP connector assets acquired by Tyco Electronics and its materials, cables and parts business form a whole industry chain model. With the consolidation of the company's leading position in heat contraction and the continuous gestation of the new energy market, Wall's whole industry chain of "basic materials-wire rod-connector-PDU- harness" is expected to copy the development model of Tyco's $10 billion giant.
Catalyst: wind power operation data significantly improved, main industry gross profit margin increased
Risk hint: the risk of deterioration of competition pattern and decline of gross profit margin, and the risk of policy change in wind power industry.