I. Overview of events
We attended the investor meeting of Haili shares (600619) and learned about the recent situation of the company.
II. Analysis and judgment
Sales of compressor products have decreased by 12% in 12 years, and frequency conversion products are expected to increase significantly in 13 years.
In 12 years, the company's compressor sales fell by 12%, but gross profit increased by nearly 2 points. Revenue from the largest customer accounts for more than 30%. Thirteen years ago, the company's frequency conversion products were mainly rare earth materials, and the fluctuation of rare earth prices did not increase the sales of frequency conversion products in the past 12 years. We judge that with the gradual return to a reasonable level of rare earth prices and the gradual development and replacement of ferrite frequency conversion products, it is expected that the company's frequency conversion products will increase significantly in the past 13 years.
With the rise of air conditioning market in India, the company has taken a strategic step.
In the past 12 years, the company has exported more than 2.4 million units, of which millions have been exported to India, which has become the company's most important overseas market. In 2008, the company set up a technology center in India. We understand that the annual demand for air conditioners in the Indian market is 3.5 million units. At present, the company has completed the registration of Haili Electrical Appliances (India) Co., Ltd., and plans to form an assembly line and sheet metal line with an annual production capacity of 2 million units / year in October, and a compressor production capacity of the same scale by the end of 14 years. In the future, combined with local climatic conditions, accelerated urbanization and the rise of real estate, we expect the Indian market to have broad room for development, with an average annual growth rate of about 20% in the future, and is optimistic about this strategic development step taken by the company.
With the efforts to promote the air energy market, Ruineng brand has entered some provinces and cities.
After completing the production line construction in 13 years, the company plans to have a revenue scale of 200 million to 300 million in the next 1-2 years. So far, the company has entered Shanxi, Anhui, Henan, Jiangsu, Zhejiang, Shanghai and other regions. At present, the average annual growth rate of the air energy industry is about 30%, and leading brands of large household appliances have also entered this market. We believe that compared with the advantages of these brands in dealer network and brand influence, the company is better in technical professionalism. Simple price competition is not expected to become the company's sales strategy.
Put forward a 13-year revenue target of 7.35 billion year-on-year growth of 8.5%
The company proposes a 13-year target income of 7.35 billion yuan (a growth rate of 8.5%), with operating costs accounting for about 86% and the expense rate for the three periods accounting for about 10%. Although there is still a gap in the completion of some of the indicators in the first quarter (the proportion of revenue growth, operating costs and three expenses are-8%, 88%, 9.7% respectively). However, we believe that with the further increase in industry concentration, the low possibility of a sharp rise in raw material prices, and the stable customer relationship, we are optimistic about the realization of the annual development goal.
Third, profit forecast and investment suggestions
We gave the company a cautious recommendation rating for the first time, with a reasonable valuation of 9 yuan. It is estimated that the EPS from 2013 to 2014 is 0.28 yuan and 0.35 yuan respectively. Corresponding to the current share price PE is 24 and 19 times.
Fourth, risk tips:
The demand for air conditioners in the domestic market is worse than expected, and the price of raw materials has risen sharply.
