Summary of the report:
Deep ploughing machinery finishing, based on washing machine to develop the business of automobile core parts
The company is a family enterprise specializing in mechanical finishing industry, has accumulated sufficient customer advantages and technical advantages in the field of washing machines and power tools, and has developed into one of the largest washing machine finishing accessories manufacturers in China. By binding HUSCO, BergWarner, Schaeffler, BMW and other customers to expand into the field of auto parts, the company tries to make the auto parts business become the company's second main business.
Washing machines and power tools are bound to high-quality customers, and the steady growth of the main industry provides cash flow support.
The company's washing machine business accounts for 80% of the company's revenue, and the profit growth rate is growing steadily. The company binds overseas high-quality customer resources such as Whirlpool in the field of washing machines and power tools. due to the strong binding nature of the supply system, these two major businesses are closely related to the capital expenditure of downstream customers. In terms of industry demand, with the further improvement of the domestic urbanization rate and the gradual release of the demand for the last round of washing machine renewal, the demand for washing machines still has room for further growth. The company's washing machine and power tools business is expected to maintain a compound growth rate of about 12% over the next three years.
Auto core parts are expected to become the second main business of the company.
Drawing on the development experience of washing machine business, the company has newly opened up overseas famous automobile mainframe factory customers such as HUSCO, BergWarner, Schaeffler and BMW, which are strongly bound with upstream customers. Revenue from the core auto parts business exceeded 80 million in 2017, up 40 per cent from the same period last year. We expect the company's third largest business segment to maintain a compound growth rate of more than 30% in the next three years. In order to support the development of this business, the company will choose the opportunity to start the convertible bond project to raise 330 million yuan, of which 210 million yuan will be used for auto parts projects to actively promote the development of auto parts business. We judge that the company is expected to make use of the power of capital to further integrate the business assets in the field of auto parts and accelerate the development of the business.
Profit forecast
It is estimated that the income of the company in 2018-2020 is 14.83,16.67 and 1.902 billion yuan respectively, the corresponding net profit belonging to the shareholders of the parent company is 1.21,1.40 and 170 million yuan respectively, the EPS is 0.87,1.00 and 1.21 yuan respectively, and the corresponding valuation is 20,17 and 14 times. "cautious recommendation" rating.
Risk hint
Investment in the auto industry fell more than expected; raw materials rose.
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