Recommendation logic: thanks to the outbreak of demand in the field of noise reduction driven by environmental protection policies, as well as investment in infrastructure, the company's acoustics business orders are growing rapidly. At the same time, the order in the field of furnace protection is in short supply due to the outbreak of customer demand in the downstream cycle, and the company will enter a period of rapid development in the next 2-3 years. Acoustics business and furnace protection business as a post-cycle variety, the business cycle is approaching, the company, as the only listed company in the industry, has benefited the most, covering for the first time and giving a "buy" rating.
Acoustics business orders show explosive growth, the company relies on the listed platform to benefit first. Noise pollution as the fourth kind of industrial pollution, with the ability and willingness of the main body of noise pollution control, the order of this industry is growing rapidly. The number of acoustic orders accepted by the company in 2018 has shown explosive growth, and we expect the entire noise reduction and pollution control market to reach 380-40 billion in 2019. Among them, the market size of noise reduction and vibration control is about 20 billion, and that of acoustic engineering is 180-20 billion.
The company's unique core protection technology effectively solves the dilemma of incineration efficiency and cost, and has high barriers to competition in the industry. The protective technology independently developed by the company can effectively prevent the incinerator from being corroded by internal gas at high temperature, prolong the service life of the incinerator, and realize efficient, harmless and low-cost incineration. At the same time, benefiting from the steady development of the overall waste incineration industry, the rapid increase in the number of waste incinerators and the continuous expansion of the protective market capacity. We estimate that in the next five years, according to the increment of garbage stove investment of 136 billion during the 13th five-year Plan period and 100 billion of the stock during the 12th five-year Plan period, the total investment of incinerator will reach 236 billion, and the corresponding incineration protection market will reach 23.6 billion yuan. and with the rapid development of the waste incineration industry, the future incineration protection market is expected to exceed expectations.
The performance of Internet marketing is excellent, and the performance commitment is expected to be completed on schedule. The company's subsidiaries Wuhan Feiyou and Changsha Jufeng are mainly engaged in software distribution, promotion business and Internet page advertising business, with high-quality Internet media resources such as Xixi Software Park and PC6 download station. The two subsidiaries maintained steady profit growth. The annual performance growth rates of Wuhan Feiyou and Changsha Jufeng in 2016 and 2017 were 436.68% and 33.21%, respectively, and 191.35% and 852.87%, respectively. The performance commitments of the two subsidiaries in 2018 and 2019 were 40.2 million yuan, 40.5 million yuan and 49 million yuan, 49.5 million yuan, respectively. The performance commitment is expected to be completed on schedule. Due to the low base, the performance of the two companies has grown rapidly.
Profit forecast and investment advice. It is estimated that the EPS from 2018 to 2020 is 0.14,0.40,0.51 yuan respectively, and the corresponding PE is 50 times, 17 times and 13 times respectively. For the first time, coverage gives a "buy" rating.
Risk hint: the risk that the long payment cycle of large customers leads to greater pressure of capital advance, the risk that the performance commitment of Internet subsidiaries is lower than expected, and the risk that the market size is less than expected.