Focus 1: there is no obvious change in the overall order, and the structure has bright spots.

Under the background of the slowing down of domestic economic growth, China's machine tool industry is still hovering at a low level, and the overall order of the company has not changed significantly. Among the main downstream customers, orders for general machinery (33%), cars (28%) and ships (10%) are basically stable, while orders for education (10%) and consumer electronics (3%) are growing rapidly, but because these two sectors account for a relatively small share, the impact on the company as a whole is limited. In the first half of this year, the company achieved business income of 3.82 billion yuan, basically the same as the same period last year, of which the revenue of CNC machine tools, the leading product, reached 2.43 billion yuan, an increase of 15.5% over the same period last year. Ordinary lathes, boring machines and drilling machines generally declined by more than 40%. The company further increases the sales proportion of high-end CNC machine tools, shrinks the ordinary machine tool business, and gradually outsources through the OEM mode. According to the amount of money, the company's current numerical control rate of machine tools has been raised to 71%.

Pay attention to the gradual industrialization of CNC machine tools in 2:i5 system, and there is room for improvement in medium-and long-term profits.

Shenyang Machine tool Group successfully developed i5 CNC system in 2012. I5 refers to Industry, Information, Internet, Integrate and Intelligent, that is, the effective integration of industrialization, information, networking, intelligence and integration. The error compensation technology of the system is advanced, the control precision reaches nanometer level, and the product accuracy reaches 3 μ m without raster ruler measurement. the system and automation can realize digital factory management for users. it can even be remotely controlled through a mobile phone. Since 2013, with the initial industrialization of CNC machine tools equipped with i5 system, the market acceptance is good, and some customers have begun to purchase on a large scale. In the past 14 years, the company has established 5 demonstration users and smart phones with i5 system as the core in Sichuan, Xiangyang, Xuchang, Suzhou and other places. The i5 CNC machine tools independently developed by the company have obvious price advantages over those equipped with Fanuke CNC system in Japan, which helps to enhance the attractiveness of downstream users. As it is in the stage of market development, the gross profit margin has not improved significantly under the current product pricing strategy, and it is expected that there is room for improvement in product profitability after large-scale production.

Focus 3: transition from a traditional manufacturer to a service manufacturer

The downturn of traditional manufacturing industry forces domestic machine tool enterprises to transform one after another. The company is the largest machine tool enterprise in China, with a broad customer base and a stock of 113000 customers, providing space for the company to transform into a service-oriented manufacturer. The company has set up a remanufacturing department to develop the stock market; in the sales model, the company draws lessons from the experience of the automobile industry to promote the 4S store model. At present, it has 34 4S stores, and plans to reach 70 in 15 years, forming a network covering the whole country. As many machine tool users are small and medium-sized enterprises with weak ability to obtain loans, the demand for financial leasing is increasing day by day. The company began to do financial leasing last year. At present, the company cooperates with Agricultural Bank of China Leasing, Bank of Communications Leasing and Haier Leasing Company to help open up the market.

Focus 4: accounts receivable is high, and the pressure on financial expenses is still high.

By the end of June 14, the company's asset-liability ratio was as high as 86%, accounts receivable was 6.58 billion yuan, and accounts receivable accounted for 89% of 13 years' operating income. The company has stepped up efforts to collect accounts receivable, but it may be difficult to improve significantly in the current market environment. During the first half of the year, the expense rate was 26.1%, and three expenses eroded the company's profits. Due to the high debt ratio, the company's financial expense rate is 8.7%, which is further higher than last year, and it is difficult for the company to reduce its expenses.

Focus 5: looking forward to the reform of state-owned enterprises to inject vitality into the development of the company

At present, 16 provinces and cities across the country have issued reform plans for state-owned enterprises, but the provinces in Northeast China have not yet issued them. Recently, the State Council issued "opinions on a number of major policies and measures to support the revitalization of the Northeast in the near future", among which the reform of state-owned enterprises is one of the key points. According to media reports, Shenyang SASAC has carried out a pilot reform of four key industrial enterprises, including the Machine tool Group, and intends to take the lead in making a breakthrough through the first test of the four enterprises, so as to play an exemplary and leading role in the reform of the city's state-owned enterprises. At present, there is no relevant policy, and the enterprise is on the wait and see. The future reform of state-owned enterprises is expected to improve the incentive mechanism of the company and inject vitality into the development of the company.

Conclusion:

Restricted by the economic environment, the company's performance is hardly substantially improved. With the gradual opening of the market for high-end CNC machine tools represented by i5 system, and the gradual transformation of the company to a service-oriented manufacturer, there is marginal room for improvement. The future reform of state-owned enterprises is expected to inject vitality into the development of the company. We expect the company's earnings per share from 2014 to 2016 to be 0.04,0.06,0.12 yuan respectively, and the current PB is 2.1x, giving it a "neutral" investment rating.