Main points of investment:
With the accelerated pace of commercial use of 5G, the demand for metal CNC machine tools may rebound: the commercial pace of 5G is accelerating. Referring to the law of the construction cycle of 4G, the peak of 5G base station construction is expected to occur in 2020-2022. Due to different frequencies, in order to achieve the same coverage of 4G, the number of 5G base stations will be twice that of 4G, and more than 7.8 million base stations will be built in the next five years. It is estimated that the number of base stations to be built from 2020 to 2024 will be 100, 180, 180, 240, 160, 000, 000 respectively. In addition, since the average power consumption of 5G devices is three times that of 4G base stations, this will greatly increase the demand for metal heat sink for 5G base stations, thus driving the demand for metal CNC machine tools. On the other hand, each round of changes in communication technology is the leading force affecting the smartphone market, and it is bound to bring the demand for replacement in the market. With the commercialization of 5G, the replacement trend of smartphones may appear in the next three years. CNC machine tools are the main processing equipment for metal parts and frames of smartphones, and are expected to enter a new economic cycle. In addition, manufacturing fixed asset investment in the main downstream, including automobiles, 3C, general equipment and other market signs of recovery, will promote the recovery of the CNC machine tool industry.
With the development of automatic port equipment, overseas expansion has achieved remarkable results: the company conforms to the market trend of port terminal automation upgrading, and increases the investment in the research and development of automation-related equipment and systems. improve the intelligence and automation level of traditional equipment such as container handling equipment, and optimize system-level solutions. In the first half of this year, the company won the bid industry benchmark-Singapore Port Group's order of about 500 million yuan for automatic rail container gantry crane, which is expected to bring significant increment to the company's automated port equipment in the next three years.
Stainless steel trade business is integrated, and the core team holds shares to build stainless steel e-commerce brand: the company integrates stainless steel trade business through Wuxi Huasangtong Electronic Commerce Co., Ltd. will form a pattern with "steel network" as the core and coordinated development of various businesses, relying on Wuxi's leading position in the field of domestic stainless steel circulation to create a complete intelligent supply chain service plate. Huashang Tong, established by the company, is more flexible in its ownership structure, and management shareholding will fully stimulate its enthusiasm and is expected to further enhance the profitability of the business. In addition, the company disclosed that Huasangtong intends to list overseas, and has begun the preparation of related work, which is worth looking forward to.
Give a "buy" rating. It is estimated that the company's operating income from 2019 to 2021 is 13.1 billion yuan, 17 billion yuan and 21.3 billion yuan respectively; the net profit returned to the mother is 320 million yuan, 510 million yuan and 690 million yuan respectively; the EPS is 0.32,0.51,0.69 yuan respectively, and the corresponding PE is 19,12 and 9 times respectively.
Risk tips: 5G construction progress is not as expected; smartphone update speed is not as expected; competition intensifies leading to a decline in gross profit margin of metal CNC machine tool business; container handling equipment and stainless steel trading business gross profit margin is low, there is a risk of dragging down profitability.