Main points of investment:
Panel furniture machinery high-quality enterprises, layout IDC operation ready to start. The company is the first furniture equipment manufacturing enterprise in China to enter the A stock market. In March 2018, it acquired the only network to form a dual-main business pattern: the parent company has 248 patents for various inventions, utility models and designs, with a wide range of products, mainly including panel furniture CNC series machining center, computer cutting board saw, automatic edge sealing machine, CNC drilling, automation and other series of equipment. The subsidiary owns 39 software copyrights and 2 patents. The main business includes server hosting and leasing, bandwidth leasing, cabinets and space leasing, cloud computing, network security and other Internet infrastructure integrated business. In the second quarter of 2018, the company incorporated the only network into the consolidated statement, with annual revenue of 1.129 billion yuan, an increase of 44.53% over the same period last year, and a net profit of 164 million yuan, an increase of 51.44% over the same period last year.
Edge computing helps, the only network development into the opportunity period. In terms of market space, the market size of global and domestic data centers in 2017 is 46.6 billion US dollars and 65 billion yuan respectively, of which medium and large data centers are growing rapidly. However, with the development of the "cloud + end" industry model in the 5G and Internet of things era to the "cloud edge" industry model, the demand for Internet infrastructure resources in marginal nodes is expected to be enhanced, and small and medium-sized IDC professional service providers are expected to usher in a good opportunity for development. The only network has formed a differentiated competitive advantage in the field of domestic IDC professional services, leading in the layout of small and medium-sized data centers and bandwidth resources. With the help of edge computing, the only network is entering a period of development opportunities. On the other hand, the company's traditional furniture machinery business has good coordination with the only network business, and furniture machinery manufacturing can combine the big data support of the only network to enhance its first-in advantage in the field of intelligent manufacturing. At the same time, the only network can take the cloud platform as the entry point to provide exclusive services for customers in the furniture industry.
The income growth rate of furniture manufacturing industry has slowed down, and the demand for intelligent equipment has led to investment in fixed assets. In 2018, the growth rate of China's furniture manufacturing industry slowed down, achieving an operating income of 708.17 billion yuan, an increase of 4.50% over the same period last year, a decrease of 5.70% over the same period last year; the total profit was 42.59 billion yuan, an increase of 4.30% over the same period last year, and the growth rate decreased by 5.00pct over the same period last year. Affected by the rapid development of the customized industry, the demand of furniture enterprises for customized furniture flexible production line has increased; due to the increase in labor costs, the demand for furniture manufacturing automation has increased; the demand for intelligent equipment has led to fixed asset investment in the furniture manufacturing industry, which increased by 23% in 2018 compared with the same period last year. The company's high-end CNC equipment sales continued to grow to drive performance growth. In the first three quarters of 2018, the company's panel furniture machinery business achieved revenue of 668 million yuan, an increase of 24% over the same period last year. With the further improvement of the demand for intelligent equipment in the furniture industry, the company's furniture machinery income is expected to further increase.
Upgrade the company to buy rating. Combined with the company's 2018 performance KuaiBao, the company's net profit from 2018 to 2020 is expected to be 164 million yuan, 233 million yuan and 305 million yuan respectively, and the corresponding EPS is 1.25,1.77 yuan and 2.32 yuan per share respectively. According to the latest closing price, the corresponding PE is 27,19,14 times respectively. The company's panel furniture machinery business is expected to achieve steady growth, while the only network business model fully benefits from the rise of edge computing, the future development is expected to enter a period of opportunity to upgrade the company to buy rating.
Risk hints: the growth of the downstream furniture industry is not as expected; the growth of the panel furniture machinery industry is not as expected; the prosperity of the data center industry is not as expected; the performance of the company is not as expected; the performance of the acquisition enterprise is not as expected; the synergy between the furniture machinery business and the only network business is not as expected.
