This report is read as follows:
With the spread of the global epidemic, the demand for canned products in overseas markets has increased, and the company has actively seized the opportunity of domestic demand and export growth of cans with easy-to-open lids. after the completion of the investment project, it will increase the production capacity of 4 billion pieces of canned lids, which will help to enhance the overall competitive strength.
Main points of investment:
Raise the target price to 33.12 yuan to maintain the overweight rating. The company issued a pre-plan for a non-public offering of shares in 2020, maintaining the company's EPS of 0.41, 0.63 and 0.80 yuan in 2019 and 2021. Considering that the company is in a leading position in the field of easy-to-open cover, with a complete product line, continuous improvement in the competitiveness of overseas export products, high order acquisition capacity and strong certainty, a certain valuation premium is given to the company with reference to the industry, giving the company about 41 times PE in 2021, raising the target price to 33.12 yuan and maintaining an overweight rating.
The company has issued a plan to increase the production capacity of 4 billion cans after the project is completed. The total amount of funds to be raised by the company will not exceed 500 million yuan, and the A shares to be issued shall not exceed 30% of the total share capital before the issue, which will be used for the reconstruction and expansion project of the intelligent production base and supplement the current capital. it is estimated that the project will add 4 billion pieces of easy-to-open cover capacity. Increasing investment is conducive to providing global customers with more cost advantage, higher quality and more complete categories of easy-to-open cover products, so as to enhance the company's market competitive advantage and profitability.
The global epidemic spread and the demand for canned products in overseas markets increased, seizing the opportunity of domestic demand and export growth in the market where cans are easy to open and cover. Under the influence of the global spread of the epidemic, the demand for canned products in overseas markets has increased; with the improvement of Chinese residents' recognition of canned food, domestic canned food consumption is expected to continue to increase. The company actively expand downstream customers to grasp the opportunity of market growth, through the implementation of fund-raising projects, can expand high-quality production capacity, meet the growing needs of the market and customers, and enhance the comprehensive competitiveness.
Internal repair and external expansion accelerate industry integration, capacity release, structural optimization, and synergy. The company accelerates industry integration through built-in capacity and extension mergers and acquisitions, enhances bargaining power and promotes profitability repair; the company has a relatively complete product system, which can meet customers' one-stop purchasing needs and benefits from export tax rebate policy dividends, enjoy the global demand market space, the orderly release of new production capacity will significantly improve performance.
Risk hints: raw material price fluctuation risk, M & An integration risk, overseas demand fluctuation risk