1. From an overseas perspective, prefabricated construction is the general direction of future industrial development. The pressure behind it lies in the serious aging of domestic construction industry workers and environmental pressure. We study the experience of construction industrialization in developed countries such as Europe, America, Japan, and Singapore. The degree of popularity is very high. The logic behind it is similar to the situation that China's construction industry is currently facing. One is the serious aging of construction workers and a serious shortage of labor intentions for the new generation. The labor shortage situation in the industry is severe; the first is pressure on environmental protection and energy saving. Compared with traditional construction methods, prefabricated buildings have obvious advantages in environmental protection, energy saving, and efficiency. They can industrialize construction workers and greatly broaden the labor sources of the industry. This is the general direction of transformation and upgrading of China's construction industry.
2. The development of prefabricated buildings in China has only just begun. The penetration rate is extremely low. There is a long way to go in the future, and it is entering a period of accelerated development from point to point. In 2016, the country began promoting the development of the prefabricated construction industry. Currently, the actual penetration rate is less than 10%, which is just the beginning. However, judging from industry research, it has already entered the 1-N stage of accelerated development and has gradually formed a cascading spread development trend with Shanghai as the core, to surrounding regions. Accelerated development is inevitable in the future, and the core cost problem limiting industrial development can already be solved. Recent grassroots research has revealed that the industry is undergoing a further transformation to refinement. It is expected that construction will be fully industrialized in 2035, which has great potential.
3. Domestically, concrete-prefabricated buildings are the main ones, which are expected to drive the 100 billion PC component market. Prefabricated buildings can be divided into: prefabricated concrete buildings, prefabricated steel structure buildings, and prefabricated wooden structure buildings. Among them, prefabricated concrete structures currently dominate prefabricated buildings in China (about 65%). As a production link, prefabricated components are one of the most important links in the prefabricated construction industry chain. Various manufacturers also mainly use precast concrete components (PCs) in production. According to our forecasts, the PC component market is expected to reach more than 200 billion by 2026, and is expected to reach 400-500 billion in the longer term.
4. As a leading enterprise in the industry, the company has obvious first-mover advantages and high performance flexibility. As a pioneer in the industry, after 20 years of exploration and development, the company has service capabilities for the entire industry chain of design, manufacturing, construction and maintenance, and has taken advantage of the 2016 policy trend to launch production capacity on a large scale. Up to now, the production capacity of the company's own factory+joint plant is close to 100 billion square meters. As the industry gradually enters the fast track, the company's first-mover advantage is very obvious, and the rapid increase in capacity utilization is expected to bring great flexibility to the company's performance.
Performance forecast and rating: The company's net profit is estimated to be 610 million/869 million million/1,116 million in 20-22. The corresponding PE is 12 times/8 times/6 times. It is covered for the first time, and a rating for increasing holdings is given.
Risk warning: The real estate boom has declined cliff-style, and the development of prefabricated buildings has fallen short of expectations.