Main points of investment

The company released its annual report for 2017: in 2017, the company achieved an operating income of 1.009 billion yuan, an increase of 49.26% over the same period last year, and a net profit of 172 million yuan, an increase of 38.36% over the same period last year.

Two-wheel drive rapid growth, R & D and promotion of both hands. In 2017, the revenue of the company's can container business reached 666 million yuan, an increase of 56.17% over the same period last year, accounting for 67.92%, which is the main driving force of the company's revenue growth; the revenue of the refrigeration equipment business reached 315 million yuan, a rapid increase of 46.33% over the same period last year. The company accelerated the development of the market, and the refrigeration equipment achieved sales breakthroughs in Anjing shares, CP Group and other major customers, made breakthroughs in the promotion of a variety of new products, accelerated the development of the domestic market and Russian market during the reporting period, and actively enhanced the influence of special container business.

The production management is improved, the price is transmitted effectively, and the comprehensive gross profit margin is improved. The company achieved a gross profit margin of 32.29% for its main business, an increase of 1.78% over the same period last year, of which the business of tank containers and refrigeration equipment increased by 2.09% and 1.58% respectively. Although the price of upstream raw materials rose sharply, the company's gross profit continued to improve. The main reason is that the company is priced at cost plus, and the proportion of special cases with higher gross margin increases.

Under the guidance of policy, there is a strong demand for tank containers. The 13th five-year Plan for the Development of Railway Container Multimodal Transport issued by the National Development and Reform Commission and other departments clearly calls for the development of international standard containers and the use of special containers such as tanks.

Railway container traffic accounts for only 5.4% of railway freight volume, which is much lower than the level of developed countries. With the advance of Belt and Road Initiative, the demand for railway freight transport of cans has increased recently.

The development of cold chain will enter the business cycle, which is good for the sales of refrigeration equipment of the company. In 2015, the cold chain circulation rate of fruits and vegetables, meat and aquatic products in China was less than half of that in developed countries, and the per capita cold storage area was only 1 / 6 of that in the United States. China's cold chain industry has a lot of room for development. The State Council issued the opinions on speeding up the development of cold chain logistics, ensuring food safety and promoting consumption upgrading, which will significantly catalyze the development of China's cold chain industry. The company has advanced quick-freezing technology and continues to develop new technologies, which is expected to enter the rapid rising channel.

The company is actively expanding production, and employee stock ownership shows confidence. In May 2018, the company will open a new standard container workshop, when the tank container production capacity will be expanded to 7300 units per year, more than 1.8 times the original capacity. In March 2017, the company awarded 353 incentive objects a total of 3.4463 million shares, accounting for 1.63% of the company's total share capital, binding the interests of core employees and injecting new impetus into the development of the company.

Profit forecast and rating: the market demand for canned containers and quick-freezing equipment is growing, and the company has outstanding competitiveness. according to the annual report, we adjust the forecast EPS of 2018 and 2019 to 1.08 yuan and 1.26 yuan, maintaining the rating of "prudent increase".

Risk hint: the development of cold chain is lower than expected, and the demand for tank containers is lower than expected.