Invisible champion of the industry, leader in enamel materials
The company is the leader of the enamel industry. At present, the company mainly sells three major products, namely, interior decoration enamel materials, industrial protection enamel materials and enamel board green building curtain wall materials, accounting for 87% of the total income. Among them, the interior facade enamel steel plate is used in urban rail transit, tunnels and other underground space decoration, is the company's traditional products. Industrial protection enamel material is the company's environmental protection business, the main products are air preheater APH, flue gas heater GGH, while developing new products low-temperature economizer, low-temperature flue gas treatment system MGGH and power plant chimney, flue, outer wall. As a new material in the building curtain wall industry, the new green building curtain wall field is mainly used in commercial buildings, banks, government agencies, hospitals and other fields.
The downstream demand is good, and the infrastructure and environmental protection projects have great potential.
The company's traditional products interior facade decoration enamel materials are mainly used in urban rail transit, tunnels and other underground space decoration. In recent years, the construction of urban rail transit and the development of underground space (urban tunnels, etc.) in China are in a period of great development, the pace of tunnel construction continues to accelerate, and the market space is accelerated. By the end of 2018, the urban rail transit network planning of 63 cities across the country has been approved, of which 61 cities are being implemented, with a total length of 7611 km.
In 2018, the investment in the construction of urban rail transit in mainland China reached a record high of 547.02 billion yuan, an increase of 14.9 percent over the same period last year. The total length of lines under construction was 6374 km, with a total investment of 4.26885 trillion yuan. It is expected that China will enter the fast lane of urban rail transit construction.
Enamel materials have excellent properties such as acid and alkali resistance, corrosion resistance and wear resistance, which can protect industrial equipment and pipelines working in harsh physical and chemical environment, and have a wide range of applications in the industrial field. The coal power industry is the first industry to implement ultra-low emission transformation, and its ultra-low emission transformation began in July 2014. According to the requirements, all qualified coal-fired power plants in the country should achieve ultra-low emissions by 2020. By the end of 2018, the number of coal-fired power units that have reached the ultra-low emission limit is about 810 million kilowatts, accounting for 80% of the total installed capacity of coal power in the country, indicating that China has built the largest clean coal power generation system in the world.
Q3 traditional business improved in 19 years, and hydrogen energy business was distributed at the same time.
Downstream demand picked up, the environmental protection industry entered the replacement cycle, orders continued, and the performance increased greatly in the first half of the year. At the same time, Shunhua New Energy and Zhejiang New Energy Investment Group Co., Ltd. signed the letter of intent for Investment Cooperation in Zhejiang Zhejiang Neng Shunhua New Energy equipment Manufacturing Project, and the three parties plan to jointly establish Zhejiang Zhejiang Neng Shunhua New Energy equipment Co., Ltd. to develop oil, hydrogen and electricity integrated energy station core equipment for supporting the construction of integrated energy station core equipment and system production projects.
Investment suggestion: we expect the company to achieve a net profit of 1.44,2.52 and 332 million yuan in 19-21, with an EPS of 0.50,0.87,1.15 yuan, a corresponding PE of 21.5X, 12X and 9X times respectively, and a 25-fold PE in 2019, corresponding to a target price of 12.50 yuan.
Risk tips: downstream environmental protection demand is lower than expected; accounts receivable risk; order risk; hydrogen energy project investment is not as expected; major shareholder reduction risk; suspension of listing risk.