The leading enterprise of sand and gravel crushing and screening equipment, the management quality is relatively stable.
① has developed into a leading enterprise in sand and gravel crushing and screening equipment industry in China. The company customizes to provide customers with complete or stand-alone equipment such as crushing, screening and transportation, as well as an overall solution with the integration of design, manufacturing and service. In addition, the company has developed a new generation of "environmental protection, intelligent crushing factory", and the company has formed a virtuous circle of "pre-research generation, development generation and production generation" in R & D and industrialization. The company has a marketing network all over the country, and has established four major sales regions in southwest, northwest, central China and North China, and established 15 sub-centers of marketing services under its jurisdiction, covering the main sand and gravel aggregate production areas in China. At the same time, the company is actively exploring the international market, focusing on the development of South and Southeast Asian markets, which has achieved initial results.
The growth rate of ② performance has slowed down, and the quality of operation is still sound. In the first three quarters of 2020, the company achieved revenue of 430 million yuan, an increase of 10.72% over the same period last year, and a net profit of 63.4991 million yuan, down 3.23% from the same period last year.
In recent years, the gross profit margin of the company has decreased, but the net profit rate and the weighted average rate of return on net assets have increased steadily, and the expense rate has been continuously optimized during the period. At present, the company's asset-liability ratio is at a low level, the capital structure is further optimized, and the debt-paying ability is strong; in recent years, the turnover rate of the company's accounts receivable continues to improve, and the payback continues to accelerate; the company's operating quality is still sound.
The supply and demand of sand and gravel aggregate industry has improved, and the concentration of sand-making equipment industry is expected to increase.
There is a shortage of ① natural sand resources, and the consumption of machine-made sand accounts for more than 90%. After decades of excessive and disorderly mining, there is a serious shortage of natural sand and gravel aggregate resources in more than half of the areas in China.
Machine-made sand has many advantages, such as rich in resources, encouraged by policies and so on. According to the data of China Sand and aggregate Network, China's machine-made sand consumption reached 19.41 billion tons in 2019, and the proportion of machine-made sand consumption in the total sand and gravel aggregate consumption increased from 36.0% in 2008 to 91.1% in 2019. The proportion of machine-made sand consumption continues to increase rapidly, and machine-made sand completely replaces natural sand.
The consumption of ② sand and gravel aggregate exceeds 20 billion tons, and the industry demand remains high. China is the largest aggregate consumption market in the world; in 2020, the total consumption of sand and aggregate in China increased to 21.3 billion tons. China Sand Association predicted that the annual demand for sand and aggregate in China will reach a high of 25 billion tons from 2019 to 2030. Sand and gravel are widely used in real estate, infrastructure and other terminal fields; thanks to the high toughness of real estate investment and the continuous increase of counter-cyclical regulation of infrastructure investment, the demand of sand and gravel aggregate industry is expected to remain high.
The supply end of ③ aggregate industry continues to improve, and the proportion of large and medium-sized sand and gravel mines is expected to increase. In recent years, driven by the stricter environmental protection policy, the closure and merger of the sand and aggregate industry and other policy factors, the number of sand and gravel mines in China has shown a trend of accelerated decline. According to data from the China Sand and Gravel Association, the number of registered sand and gravel mines in China decreased by more than 40,000 at the end of 2019 compared with 2013. However, at present, the proportion of large and medium-sized sand and gravel mines is still low, only 42.67% at the end of 2019. In the future, the process of replacing the backward production capacity of small and micro sand and gravel mines with high-quality production capacity formed by large and medium-sized sand and gravel mines is expected to be accelerated. The reform of the supply side and the continuous growth of the demand side have promoted the rapid rise of sand and gravel aggregate prices in recent years, which has also led to a significant improvement in the operating efficiency of enterprises in the industry.
The market scale of ④ sand-making equipment has reached 25.3 billion yuan, and the industry concentration is expected to continue to improve. According to the calculation of China Sand and Gravel Association, the market scale of machine-made sand crushing and screening equipment in China has increased from less than 10 billion yuan in 2009 to 25.3 billion yuan in 2019. At present, the concentration of machine-made sand equipment industry is low, and the market competition is fierce. Affected by the change of the scale and structure of sand and gravel mines, the market share of domestic first-and second-line brands mainly engaged in middle-and high-end crushing and screening equipment will continue to increase, and the market demand for medium-and low-end crushing and screening equipment will gradually shrink. A large number of small manufacturers will face "customs withdrawal and transfer", and the market concentration of crushing and screening equipment will be further improved.
The company is a front-line manufacturer of complete sets of crushing and screening equipment in China, and is expected to start a new journey to take off.
With the simultaneous development of ① technology and marketing, the company has begun a new journey of development. The company has worked hard in the field of complete sets of crushing and screening equipment, focusing on providing overall solutions to meet different types of needs according to the customer environment, and has gradually developed into a first-tier brand in the field of domestic crushing and screening equipment production. The company's IPO investment project has a total investment of 368 million yuan, and the production capacity is expected to double after completion. At the same time, the company makes efforts in both technology and marketing to gradually enhance its market competitiveness.
The proportion of ② key customers' income has increased year by year, and its own competitive advantage has been gradually enhanced. In 2019, the sales of the company's top 10 customers reached 121 million yuan, an increase of 67.67% over the same period last year. The amount of equipment purchased by large customers with more than 5 million yuan increased by 83.76%, accounting for 23.44% of the company's revenue, accounting for 8.42% of the year-on-year increase. In recent years, the company's market share has gradually increased, domestic and overseas markets have continued to open up, the proportion of major customers' income has increased year by year, and their own competitive advantage has been gradually enhanced.
Coverage for the first time, giving a "overweight" rating. The company is a leading enterprise in the sand and gravel crushing and screening equipment industry in China, with a marketing network all over the country, leading domestic technological achievements, and relatively sound business quality in recent years. Under the influence of factors such as supply-side reform and strict environmental protection in the sand and aggregate industry, the number of large and medium-sized sand and gravel mines is gradually increasing, and the market demand for medium and large crushing and screening equipment is expected to increase, leading to the concentration of sand-making equipment industry. As a front-line manufacturer of complete sets of crushing and screening equipment in China, the company has a strong competitive advantage. We estimate that the return net profit of the company from 2020 to 2022 is 0.84,1.13 and 148 million yuan respectively, and the PE corresponding to the current stock price is 51.72,38.40,29.35 times respectively.
Risk tips: national macroeconomic policy adjustment risk, capital construction, real estate investment less than expected risk, market competition intensified risk, customer structure change risk, fund-raising project promotion less than expected risk, performance lower than expected risk, and so on.