This report is read as follows:
The company has obvious comprehensive advantages and qualification threshold, focusing on defense products, foreign trade subcontracting and civil-military integration of three business areas. Affected by equity pledge, the company's ownership structure is in the process of adjustment, and the business needs to be restructured.
Main points of investment:
Investment suggestion: cover Xinyan shares for the first time, the target price is 4.80 yuan, it is recommended to increase your holdings cautiously. The company has comprehensive advantages and qualification threshold, adhere to the "military industry + agricultural machinery" double main industry development pattern.
With the acceleration of national defense construction, the company's military business will continue to benefit. According to the announcement of March 29, 2019, after the controlling shareholders and concerted actors Zhou Weihua, Han Hua and Yang Lijun lifted part of the pledged shares, 74.47% of the shares were still in a pledged state, 75% of the shares were in a state of pledge, and the future shareholder structure was adjusted, and the business needed to be restructured. It is predicted that the EPS of the company in 2019 will be 0.20,0.24,0.28 yuan, and the company will be given 24 times PE in 2019, with a target price of 4.80 yuan.
The prosperity of the aerospace equipment industry is rising, and the military business will benefit. The aerospace industry has blossomed and borne fruit in recent years, and new products are listed in large quantities. As an aerospace processing and manufacturing industry, the military plate of Xinyan shares is an indispensable part of the industrial chain. Benefiting from the upward prosperity of the industry and maintaining the judgment that the average growth rate of the military processing industry is 5-10%, the company, as a supporting enterprise of a certain scale, has greater customer stickiness, and it is expected that the company's business will have a deferred effect in the future.
Private leading enterprises of military parts and components will further release processing and manufacturing capacity. 1) the company has more than 30, 1200 sets of processing equipment and 2558 thousand square meters of factory buildings, and the scale is one of the company's core competitiveness; 2) the company has the R & D and production capacity of aircraft, engines, rockets, rail interchange and other products, and has obvious comprehensive advantages; 3) the company has formed a strategic partner with a number of mainframe factories and signed a long-term supply agreement with Saifeng internationally to create a new profit growth point.
The company's business level has been upgraded, and the structural adjustment of products has promoted the rapid expansion of the market. The company adheres to the strategy of "adjusting the structure, raising the level and increasing efficiency", and the products gradually change from parts to units and from low added value to high added value, so that the company's business level is upgraded and the market expands rapidly. foreign trade subcontract orders show a significant upward trend in 2019.
Risk hint: the growth rate of military expenditure is lower than expected; the progress of new products is lower than expected.