Report guide
Sales of well submersible pumps are strong, and the company plans to increase the production capacity of 1.8 million well submersible pumps and 200000 solar submersible pumps, and the company's total production capacity is expected to double again after reaching production.
Main points of investment
The submersible pump for well use is the leader in the subdivision field and strives to build the first export brand.
Founded in 1993 and listed in 2016, the company specializes in the research, development, production and sales of well submersible pumps, small submersible pumps, land pumps and solar pumps. the core product, well submersible pumps, contributes 80% of the company's income. the products are sold all over Asia, Europe, Africa and more than 60 countries and regions. The company's well submersible pumps have a significant competitive advantage in the price-sensitive and voltage-unstable Asian and African markets, with a market share of about 70% in some areas. The company's product sales scale is in the leading position among domestic well submersible pump manufacturers, ranking first in China for two consecutive years in 2012 and 2013.
Subdivision of submersible pumps for wells, Dongyin has the most potential for development.
Due to the high requirements for product quality, the development of the well submersible pump industry is more mature abroad, and the larger companies in the industry are mainly foreign enterprises, including Granford in Denmark, Franklin in the United States, SAER in Italy, Lovala in Italy and Bederon in Italy. At present, Dongyin shares' products are mainly 4 inch 6 inches, and their comprehensive performance reaches or exceeds that of foreign giants Granford and Franklin, but the price is only 8% of that of similar products. The domestic market is more scattered, compared with domestic enterprises, Dongyin shares have obvious advantages in scale. On the whole, Dongyin has stronger growth.
The dependence on groundwater is increasing, and the scale of submersible pumps for wells is expected to reach 24 billion in 2020.
The world is facing a water resources crisis, and global fresh water accounts for only 2.53%, of which surface fresh water accounts for only 0.3% of freshwater resources, and freshwater resources are less and unevenly distributed. at the same time, the global drought trend is obvious, such as serious pollution of surface water resources. groundwater is an important solution to the shortage of water resources. At present, the utilization rate of global groundwater resources is 40%, while that of domestic groundwater resources is only 12%. With the increase of global demand for water resources, the degree of dependence on groundwater is increasing, and the utilization rate of groundwater has a higher room to improve.
The improvement of groundwater utilization will directly drive the sales of submersible pumps for wells. Taking into account the increasing dependence on groundwater for domestic and production water in Asia and Africa, and the demand for agriculture and animal husbandry irrigation in the arid areas of northern China, we estimate that the global compound growth rate of well submersible pumps will be 9% in the next three years, and the domestic growth rate will be 12%. It is estimated that the global market size is expected to reach 24 billion yuan by 2020, and the domestic market is expected to reach 10 billion yuan.
The price of solar submersible pump is higher, and the new product opens 6 times the market space.
The issuance of convertible bonds will be smooth, and the fund-raising project will proceed smoothly. In order to implement the annual production capacity of 2 million submersible pumps, including 1.8 million well submersible pumps and 200000 solar submersible pumps, the production capacity is expected to double again after reaching production. The company announced in September 2017 that the project would be implemented through the issuance of convertible bonds to raise matching funds, and some of the deficiencies would be solved by the company with its own funds or through other financing methods. In March 2018, the company issued convertible bonds approved by the CSRC, and the project progressed steadily.
6 times the price of solar submersible pump, the product value is higher. In the areas where the infrastructure is backward, solar submersible pumps do not need to set up separate circuits, the requirements for the use environment are low, and the market demand is large. Driven by market demand, the company aims at complete sets of supply such as pumps and inverters in the future. the value of a complete set of new solar pumps (pumps + inverters) is about 3000 yuan, which is 6 times the unit price of well submersible pumps, and the product value is even higher. further enhance the company's profitability.
Profit forecast and valuation
It is estimated that the company's revenue from 2018 to 2020 will be 1.051 billion yuan, 1.267 billion yuan and 1.596 billion yuan, with year-on-year growth rates of 26.93%, 20.55% and 25.94% respectively, and the net profit will be 149 million yuan, 184 million yuan and 234 million yuan, respectively, with year-on-year growth rates of 29.00%, 22.84% and 27.41%, respectively. The EPS was 0.75,0.89 and 1.101 yuan per share, and the corresponding PE was 21.38,17.41,13.66 times, respectively.
In view of the company's advantages in the field of well submersible pumps and its long-term layout in the solar pump market, it is optimistic about the future development of the company and gives it an "overweight" rating for the first time.
Risk hints: RMB continues to appreciate sharply; political and policy risks in product importing countries; production can not be digested as expected; raw material prices continue to rise sharply.
