Investment logic
The second market share of tank containers is that non-standard containers have comparative advantages. Tank containers are used for the transportation of chemicals, food and other goods. 80% of the world's output comes from China, China International Marine Containers is the industry leader, and Sifang Technology ranks second. The company has a comparative advantage in non-standard containers, with an output of 5712 tank containers in 2017, with a market share of 12%. It has established long-term cooperation with large international shipping companies and container leasing companies, and revenue orders have continued steadily. The company's tank capacity is generally tight, and the new production line of standard boxes was put into use in mid-2018, and the annual production capacity increased from 4000 cases to more than 10000 cases, realizing standard box and non-standard line production, and the ability to undertake large orders has been enhanced.
The opening of the domestic tank container market brings incremental space. Tank containers have high turnover efficiency and strong safety, and the application of tank containers in multimodal transport and dangerous chemicals transport is being gradually promoted in China.
In 2017, Henan Province became the first region in China to directly subsidize tank containers, with subsidies ranging from 10,000 yuan per vehicle on 2-3-4 to the replacement time. At the same time, large international box rental companies actively expand the Chinese market, the number of domestic cans in Exsif China exceeds 2000, and the can operation system is gradually cultivated and improved. The use environment of domestic tank containers is optimized to drive the incremental market.
The domestic leader of quick-freezing equipment, the rapid growth downstream brings an increase in equipment procurement. Sifang Science and Technology is in the first echelon of domestic quick-freezing equipment, with an income of 315 million yuan and a market share of more than 10% in 2017.
Benefiting from the growth in consumption of quick-frozen food, the scale of industries such as meat, aquatic products and quick-frozen products continues to expand, leading to an increase in the purchase of quick-freezing equipment, with an average annual growth rate of nearly 20%. The company has accumulated quick-freezing equipment for many years, has outstanding non-standard design ability, and has been recognized by Shuanghui, Yurun, Anjing and other large food processing enterprises.
Food machinery has a broad space to empower the long-term development. The domestic food machinery industry is a huge market with a scale of 100 billion yuan. In 2014, the domestic food machinery output value was 104.9 billion, an increase of 6.3% over the same period last year, of which agricultural and sideline products processing equipment was 59.5 billion, an increase of 8.6% over the same period last year. Quick-freezing equipment belongs to the subdivision category of food machinery, and the company has reached the leading position in China and has international competitiveness. at the same time, the company has set up subsidiaries such as Sifang energy saving, Jasco food technology and other subsidiaries, extending to quick-freezing accessories and food machinery industry. The existing products include food sizing and powder wrapping production line, baked food awakening equipment and so on, which provide a wider space for long-term development.
Profit forecast and investment suggestion
We forecast that the company's net profit from 2018 to 2020 will be 1.99,2.35 and 282 million yuan, an increase of 16%, 18% and 20% over the same period last year. Corresponding to the 16,14 and 11 times of PE from 2018 to 2020, the company will be given a "buy" rating with a target price of 18-20 yuan.
Risk hint
The risk of declining demand for quick-freezing equipment; the risk of declining demand for tank containers caused by intensified trade frictions; the risk of a sharp rise in stainless steel prices, resulting in a decline in gross profit margin; the risk of exchange rate fluctuations.