Panel furniture machinery leading enterprises, layout IDC operation results are remarkable.
(1) since its inception, the company has been focusing on the R & D, production and sales of complete sets of equipment in the panel furniture production line, and has accumulated 24 years of industry experience in the R & D and production of panel furniture machinery. some products have reached the advanced level of similar international products and can completely replace imported equipment. In addition, in March 2018, the company acquired 100% equity interest in only Network to enter the field of IDC and cloud computing related services, and has formed a business pattern of joint development of two main businesses.
(2) in 2019, benefiting from the improvement of the special equipment market and the increase in market demand for IDC comprehensive services, the company's performance ushered in a significant improvement, of which IDC comprehensive service revenue reached 610 million yuan, an increase of 160.0% over the same period last year. We believe that as the only network continues to expand the business of key customers, the company's performance is expected to achieve sustained growth.
The marginal improvement of the furniture industry is better, and the cash cow characteristics of the company's equipment business are prominent.
(1) Furniture plate belongs to post-real estate durable consumer goods, affected by the lagging sales cycle of real estate, it is expected to usher in a continuous delivery period in 2020, driving the development of the furniture manufacturing industry. According to the China Industry Information Network, the market size of China's furniture industry will exceed 1 trillion yuan by 2024.
(2) driven by the personalized and fashionable demand of furniture, the custom furniture industry in China is developing rapidly, which drives the flexible production demand of equipment. At the same time, due to the increase in labor costs, the demand for furniture manufacturing automation has increased, leading to investment in related automation equipment. With the further improvement of the demand for intelligent equipment in the furniture industry, the company's furniture machinery income is expected to further increase.
(3) the company is the leading manufacturer of panel furniture production equipment in China, and is in a leading position in the industry. As the industry gradually matures, the growth rate of investment slows down, and there is no need for large-scale capital investment. Special equipment business has become the company's cash cow business, which provides sufficient funds for the company to expand its IDC business.
The IDC market is growing rapidly, and the only network prospect is promising.
(1) the China IDC Circle Research Center predicts that China's IDC market will reach 320 billion yuan by 2022, with a compound growth rate of 26.9% in the next three years. The construction of 5G and the "new infrastructure" of the data center is expected to continue to boost the development of the IDC industry; 5G leads to the outbreak of data center traffic, highlights the importance of the data center, and gradually develops to a larger scale in the future.
(2) Edge computing is a small data center that is as close to the terminal as possible, with core advantages such as high performance-to-price ratio, reduced delay, security compliance and so on. it is widely used in industrial Internet, vehicle networking and other fields. According to IDC News, the marginal computing market will be worth $6.72 billion by 2022. The rise of edge computing will drive the data center to the "cloud edge" era.
(3) the only network was established in 2006 and has grown into a well-known comprehensive solution provider for cloud services in China. In 2019, the only network achieved revenue of 510 million yuan, an increase of 78.5% over the same period last year, and a net profit of 90.403 million yuan, an increase of 25.8% over the same period last year. In terms of data center cabinet construction, the company's future construction goal is to reach 15000-20000, focusing on the layout of Beijing, Shanghai, Shenzhen and Dongguan. The only network is located in Dongguan, adjacent to Shenzhen, with obvious location advantages and promising future development.
Cover for the first time, giving a "buy" rating. The company has formed a double main business pattern of furniture machinery + IDC business, all of which have room for growth. We estimate that the return net profit of the company from 2020 to 2022 is 2.57,3.52 and 445 million yuan respectively. We use PE model and EV/EBITDA model to analyze the valuation of the company.
(1) the PE model is used to evaluate the business of each sector of the company. The company's business is divided into panel furniture machinery and IDC operation business, among them, panel furniture machinery business, comparable company PE is about 15, corresponding to the company panel furniture machinery business market value of about 3 billion yuan in 2022; IDC operation business, optimistic about the new infrastructure background, 5G network, data center and other new infrastructure construction process. The average PE (2022E) of this business is about 37. Based on this, it is estimated that the reasonable market value of the company's IDC operation business in 2022 is about 10 billion yuan, and the overall market value of the company is expected to exceed 13 billion yuan.
(2) the IDC cabinet will incur a large amount of depreciation expenses after delivery, and the short-term net profit is low, so the EV/EBITDA model is used to value the IDC business. Assumption: ① uses a non-public offering to raise 790 million yuan to build a green industrial cloud data industry base in Sha Tin, superimposing the annual cash profit of professional equipment, which is expected to meet the future investment in cabinet construction, so assuming that the company no longer expands its debt ratio, the ratio of net debt to company value (EV) is between 20 and 30 percent of the historical level. ② assumes that the net interest rate of IDC business in 2020 is about 17% (the only network historical net interest rate is between 17-30%, and the peer historical net interest rate is between 11-22%), and the tax rate is 15%. It can be estimated that the company's IDC operating business EBITDA in 2020 is about 326 million yuan. The average EV/EBIT (2020E) of comparable companies is about 34 times, and the forward EV of IDC operating business is about 11 billion yuan. After deducting 20-30% of the net debt / EV, the reasonable market value of the business is about 78-9 billion yuan.
(3) to sum up, by using both PE model and EV/EBIT model, the long-term reasonable market value of the company is expected to exceed 10 billion yuan, which still has much room for improvement compared with the current market value of the company; cover for the first time and give "buy"
Rating.
Risk hint: the growth of furniture machinery industry is not as expected, the competition in IDC industry is becoming increasingly fierce, the coordination of the company's furniture machinery business and the only network business is not as expected, the risk of accounts receivable recovery, the risk of valuation and so on.