This report is read as follows:
The company is the leader of the domestic munitions industry, the main business continues to upgrade, actively expand emerging business has become a bright spot, the overall performance is expected to stabilize and improve, covering for the first time to carefully increase the rating.
Main points of investment:
For the first time, coverage gives a cautious overweight rating. It is estimated that the EPS in 2019, 2020 and 2021 will be 0.09,0.10 and 0.12 yuan respectively, an increase of 21.26% and 13.37% over the same period last year. Considering the progress and gradual stabilization of the company's business adjustment process, the company will be given 48 times PE in 2019 with a target price of 4.30 yuan, with a cautious overweight rating for the first time.
The military supplies market is stable, and the market for civilian professional clothing is relatively large. At present, the level of national defense expenditure in China is relatively low, and there is room for the development of the munitions industry. in the future, the entry of new fighters and the launching of domestic aircraft carriers will bring expansion of supporting troops, and the transformation of war patterns will promote the reform and upgrading of munitions. The current competition pattern of the civil professional wear market is scattered. With the improvement of the degree of marketization, the development of the tertiary industry will promote the growth of the subdivided track and the overall market scale.
The development of traditional business has stabilized and been steadily advanced and optimized. The company has rich experience in the munitions market, strong R & D capability, and continues to increase R & D investment. In 2018, the company accounted for 60% of the munitions market, covering a large number of high-quality central enterprise customers in the civilian products market. The development of new areas of military supplies and the growth of civilian orders will promote the steady growth of the company's core business. In addition, the company's adjustment and optimization of the capacity structure to improve capacity utilization, laying the foundation for the company's future business.
Actively carry out the park business, the emerging service industry will become the bright spot of future development. With the development of the International Huayuan project and the business model of "1x" consumer integration, combined with the company's remarkable advantages in channel construction, compound operation and customer cooperation, the project has advanced steadily and the results of the transformation have gradually emerged. With the operation of various interregional Chinese gardens one after another, the emerging business will help the company improve its performance in the future.
Risk factors: the income of the main business fluctuates, the new business development is not as expected, and the prosperity of the outdoor industry is not as expected.
