Summary of the report:

Founded in 1960, the company expands its business in many fields from the gearbox. Since its establishment, the company has always focused on the R & D and production of the gearbox. Since the 1980s, on the basis of independent development, the company has introduced foreign advanced technology to achieve secondary innovation. The product field extends from a single marine gearbox to marine propulsion systems, construction machinery transmissions, wind power generation and other new energy gearboxes, agricultural machinery transmissions, powder metallurgy products, automotive transmissions, rail transit gearboxes, special products, industrial gearboxes, large and high-precision parts and so on.

Marine gearbox is the first core business of the company, and the completion of shipbuilding can be accelerated or benefit the company. The company disclosed in the prospectus that the domestic market share of marine gearbox in 2009 was the first, reaching 65.5%. At present, the market share of marine gearbox in the field of marine gearbox is still more than 50%, and the leading position is significant. According to the statistics of the China Shipbuilding Industry Association, the shipbuilding industry maintained a good momentum of development in the first half of 2023, with the three major indicators of shipbuilding growing in an all-round way. in the first half of the year, the completed shipbuilding volume was 21.13 million deadweight tons, an increase of 14.2% over the same period last year. New orders received were 37.67 million deadweight tons, an increase of 67.7% over the same period last year. As of the end of June, hand-held orders were 123.77 million deadweight tons, an increase of 20.5% over the same period last year. In addition, domestic shipbuilding completion and newly signed orders increased significantly in the second quarter of this year compared with the first quarter, and the company's gearbox products are generally delivered to the shipyard during the installation phase of the new ship. the progress of shipbuilding completion is accelerated or the speed of taking orders for the company's ship gearbox is accelerated.

In non-ship business, wind power is an important incremental source of future performance. The company is one of the earliest enterprises to enter the wind power gearbox industry in China. after more than 20 years of continuous development and technical precipitation, the company has formed a full series of wind power gearboxes with a power range from 100kW to 8MW and a maximum growth ratio of 200. the products have the characteristics of high reliability, high performance-to-price ratio and so on. The 2.x, 3.x, 4.X, 5.x, 6.x and 7.XMW gearboxes developed based on the platform can meet the mainstream doubly-fed and semi-driven wind turbines in the market. According to Wind data, China's new wind power installation reached 28.92GW from January to August 2023, a sharp increase of 79.2% over the same period last year. The return of wind power installation to the upstream channel is expected to boost the demand for wind power gearboxes, thus leading to the growth of the company's wind power business.

Profit forecast: the company's net profit from 2023 to 2025 is expected to be 2.49,2.81 and 315 million yuan respectively, corresponding to PE values of 15, 13 and 12 times. Coverage for the first time, giving a "overweight" rating.

Risk tips: bad debt risk; technology update and product development risk; profit forecast and valuation model failure