Main points of investment:
The core of the ship is equipped with high barriers and large space. The electrical system undertakes the power distribution and transmission of the whole ship to ensure the normal work of the electrical equipment; the automation system uses automation devices instead of manual operation and management of the ship to improve safety and reduce the work intensity of personnel. As an important part of the ship, electrical system and automation system have the characteristics of high technical barriers and high added value, accounting for 4% and 7% of the total ship price respectively. As the largest shipbuilding country in the world, the market space of ship electricity and automation in China has reached 35 billion yuan in the civil field alone.
The prosperity of military ships supports steady development, and the potential demand for civil ships has not yet been released. The company's current products are mainly used in the field of warships and official ships. in terms of warships, 21 main ships were launched in 2018, and six Aegis ships reached a new high. under the background that there is still an obvious gap in naval equipment, warship construction is expected to remain high and become a stable support for the company's development. On the one hand, the civil ship field is currently at the bottom of the cycle, and shipbuilding completion is at a low level. On the other hand, the market is still dominated by foreign brands, and the proportion of independent products is relatively low. with the gradual recovery of civil ships and the improvement of the penetration of independent products, the market demand of civil ships is expected to become an important driver for the company's future growth.
The development of intelligent ships is accelerated, and the growth of engine room automation is accelerated. Intelligent ship, which combines modern information technology and artificial intelligence, is the key direction of ship development in the future. In December 2018, the Ministry of Industry and Information Technology issued the Action Plan for the Development of Intelligent ship (2019-2021), which further increased the driving force for the development of intelligent ship. Engine room automation system as an important part of intelligent ships, with the development of intelligent ships, the demand is expected to increase rapidly. The company's intelligent engine room products have been successfully applied to the "Xuelong 2" research ship, the future is expected to further promote, performance to achieve accelerated growth.
Profit forecast and investment rating: buy rating. The company's main business is the marine electrical and automation system business with high technical barriers and high added value, under the background of the steady growth of military products, the potential demand for civilian products has not yet been released, and the development of smart ships to enhance the demand for intelligent engine room, the growth of the company is expected to accelerate. It is estimated that the net profit from 2019 to 2021 will be 125 million yuan, 159 million yuan and 191 million yuan respectively, and the corresponding EPS will be 0.74 yuan, 0.94 yuan and 1.13 yuan respectively, and the corresponding share price PE will be 25 times, 20 times and 16 times respectively.
Risk tips: 1) warship construction is not as expected; 2) civil ship recovery and equipment localization are not as expected; 3) corporate profits are lower than expected; 4) systemic risk.
