Core ideas:

1. The company is a leader in the piling machinery industry. The coordinated development of engineering and equipment is expected to benefit from the continuation of the prosperity of the industry. ① piling machinery has the characteristics of multi-variety, small batch, and the coordinated development of equipment and engineering. The ability of collaborative innovation and development of equipment and engineering is one of the core competitiveness of enterprises. The company attaches importance to leading innovation, set up a construction company, through self-established construction company feedback data, collaborative innovation of new products, further meet the needs of customers. The output capacity of the company's complete set of solutions has been in a leading position in China. ② 2021, the prosperity of the piling machinery industry is expected to continue. The current cycle of construction machinery is more robust than the previous cycle, and the demand structure of this cycle has changed from mainly relying on investment in the previous cycle to new demand + renewal demand development. superimposing the environmental protection renewal demand brought about by the landing of the future national four emission standards, the demand resilience of the industry has been further improved. As a leader in the piling machinery industry, ③ ranks third in the domestic market share of rotary drilling rigs (about 17%), and the market share of hydraulic static pile drivers (more than 50%) ranks first in China. It is expected to benefit from the continuation of the industry's prosperity.

2. The continuous optimization of the company's excavator sales structure is expected to improve the company's profitability, and the introduction of high service quality and high-quality sales team will promote the continuous increase of market share. ① from January to November 2020, the company's excavator sales growth rate of more than 50%, higher than the industry growth rate (37.4%), and the company's market share rose to the seventh in the industry in November. In the past, the company's excavator business was mainly small and micro-excavation. in order to improve the profitability of the excavator business, the company made great efforts to optimize the sales structure of the excavator. In 2020, the company's sales volume of large-scale excavation accounted for nearly 30%, and the company planned to account for more than 1 million in mid-2021. Among them, the proportion of large-scale excavation is more than 10%. Relying on the company's high service quality (for example, the company has set up nearly 20 subsidiaries overseas, which can quickly respond to overseas demand) and the introduction of experienced digging sales team, we expect the company's excavator business to continue to grow in 2021. ② Industrial City project plus excavator business capacity construction, dig the proportion of sales is expected to continue to increase. In January 2021, the company plans to invest 1.51 billion yuan to build the third phase of the industrial city project, with a total planned land of 426 mu, including super-large excavators, high-end anode materials, etc., and is expected to achieve an output value of more than 20 billion yuan when the industrial city project reaches full production in 2022. ③ is actively promoting the excavator business to reduce costs and increase efficiency, and it is expected that the excavator business cost will be reduced by 10% and 15% in 2020.

The third phase of the company's Industrial City project plans to build an intelligent cutting center, which will greatly improve the company's production efficiency and reduce costs after the project is launched. The continuous promotion of cost reduction and efficiency measures such as the Wisdom cutting Center is expected to improve the company's profitability.

3. With the layout of the whole industry chain of navigation, the company is expected to benefit from the promotion of low-altitude openness in China. ① is expected to benefit from the steady growth of the global MRO market. In 2019, the company completed the wholly-owned acquisition of Avmax, forming the layout of the whole industry chain of navigation. Avmax is the world's third largest regional aircraft leasing company, is the global high-quality aircraft market target, has a wealth of regional aircraft maintenance (overhaul), maintenance experience. The size of the global general aviation fleet has grown steadily, from 23927 to 27492 in 2015-2019. According to the consulting firm Oliverwyman,2015-2020, the global MRO market size CAGR 56.21%. As the high-quality target of the global MRO, Avmax is expected to benefit from the maintenance demand brought about by the steady growth of the global fleet.

② is expected to benefit from the gradual improvement of low-altitude openness in China. Since the Civil Aviation Administration of China promulgated the measures to accelerate the Development of General Aviation in 2010, China has continuously issued a low-altitude opening policy. In 2018, the Civil Aviation Administration issued the "General Plan for the Construction of low-altitude Flight Service support system". It is proposed that by 2022, China will initially build a three-level low-altitude flight service support system. As an enterprise with the layout of the whole industry chain of the navigation industry, the company is expected to benefit from the gradual improvement of the low-altitude openness of our country.

4. lay out the field of new materials to create a new growth point of the company's performance.

In November 2020, the company signed a framework agreement with Guizhou Dalong, and the company plans to invest 500000 yuan to build the "Guizhou Dalong annual output of 100000 tons of anode materials and its high-end equipment application project". The company has developed a new ultra-high temperature purification graphitization system for three years and has independent intellectual property rights of ultra-high temperature environmental protection graphitization equipment. The project will promote the formal application of the high-end graphite production equipment developed by the company to the industrialization of artificial graphite, quickly form the production capacity of negative materials, and meet the strong demand for negative materials in new energy vehicles, energy storage batteries and other industries. to create a new growth point for the company's performance.

5. Investment suggestions: the company's net return profit from 2020 to 2022 is expected to be 6.74,8.98 and 1.057 billion yuan respectively, corresponding to PE 12.65,9.50,8.07 times, covering for the first time and giving a "recommended" rating.

Risk hints: investment in infrastructure and real estate is lower than expected, overseas expansion is not as expected, Zhongda Mining market expansion is low expected, and the progress of production capacity construction of the third phase of the project is low.