The business blossoms at many points, giving a "buy" rating for the first time.
1) CNC machine tools: 5G-related CNC products are expected to grow rapidly driven by the industry; 2) Port machinery: the continuous upgrading of major domestic ports leads to an increase in the demand for intelligent handling equipment; 3) Steel trade: relying on regional advantages for rapid expansion.
We are optimistic about the future development of the company, and it is expected that 2020x2021 will achieve EPS 0.42, 0.54 and 0.71 respectively in 2022. The current stock price corresponds to the times of PE in 16-12-9, giving a "buy" rating for the first time.
CNC machine tools: fully benefit from the dividend of 5G era, Chongqing manufacturing base put into production to improve business layout
As one of the largest manufacturers of middle and high-end CNC machine tools in South China and a leader in the consumer electronics segment, the company will fully benefit from the 5G dividend: 1) develop vertical machining center products for 5G base station heat sinks, which have covered mainstream communications equipment suppliers, and the construction of 5G base stations will meet the peak, boosting the demand for core components. 2) the company's products can be used for processing 5G mobile phone glass and ceramic back plate processing, metal frames and other parts, driven by the replacement tide related CNC products are in short supply. In addition, Chongqing machine tool manufacturing base put into production, expand the southwest market, improve the layout of large machine tools, is expected to become another performance growth point of CNC machine tool business.
Port Machinery: strategic deployment of the construction of intelligent ports, increased demand for intelligent handling equipment, the company is expected to fully benefit
The guidance for the Development of Intelligent Shipping points out that the top-level design of intelligent shipping development will be basically completed in 2020, and the basic environment for intelligent shipping development will be basically formed in 2025. Build shipping new business type characterized by high automation and partial intelligence; form shipping new business type characterized by full intelligence in 2035; and form a high-quality intelligent shipping system in 2050. Operating equipment is one of the main expenditures of automatic terminal investment. As a first-class equipment supplier, the company will fully benefit from the increase in the procurement of intelligent handling equipment brought about by the upgrading of major domestic ports.
Steel trade: relying on regional advantages, rapid expansion, optimization and integration of plates are expected to be listed overseas
Wuxi is the most important stainless steel distribution and processing center in China, which provides a good location advantage for the company's business development. The company has completed the integration of stainless steel business, forming a pattern with "steel net" as the core and focusing on the development of online transactions, and plans to promote the overseas listing of business integration platform "Huasangtong" and expand the business scale of stainless steel supply chain.
Risk tips: 5G deployment progress is not as expected, Chongqing base production is not as expected, competition intensifies.