The company plans to issue 23 million RMB common shares, accounting for 25.27% of the total share capital after the issue, with an issue price of 16.00 yuan and a price-to-earnings ratio of 39 times.
The company is an excellent enterprise of pressure vessels in the west of China. The company's main products are pressure vessel equipment and piping equipment, pressure vessel business income accounts for 91.28% of the main income, piping equipment accounts for 8.72%.
The market space for pressure vessels is vast. The pressure vessel industry as a whole maintains a relatively rapid development trend. The compound growth rate of the industry from 2006 to 2009 is 21.51%. The upgrading of pressure vessels to heavy industry is the future trend. It is estimated that the future market demand: chemical equipment heavy vessels 2.5 million tons, nuclear power pressure vessels 80 billion, 1.7 megawatts of power stations and auxiliary equipment.
The company urgently needs to break through the capacity bottleneck. The company is a leading enterprise in pressure vessel technology in the west, and most of them are high-quality large-scale enterprises downstream. It has cooperated with Dongfang Electric Group for many years and has a close relationship. Due to capacity bottlenecks, orders have been arranged until 2011. Once the fund-raising project reaches production and breaks through the bottleneck, it is expected to achieve explosive growth.
Nuclear power equipment manufacturing industry is the future development direction of the company. According to the revision of the medium-and long-term development plan of nuclear power, the market size of nuclear power equipment will reach 500 billion yuan. From 2009 to 2015, there will be a market space of about 80 billion yuan for level 2 and 3 equipment and auxiliary equipment on the nuclear island. The company has adjusted its layout and is actively preparing to enter the nuclear equipment market.
The company currently has about 40 million orders for nuclear equipment, and after obtaining the civil nuclear safety equipment manufacturing license, the company is expected to achieve a magnificent turnaround.
The fluctuation of steel price has a significant impact on earnings. The production cost of steel in the company has been basically maintained at more than 70% for many years. The impact of changes in steel prices on profits is significant. The company's ability to raise prices and the ability to manage steel prices will be the key, considering that steel prices are currently hovering at a low level, which has a relatively weak impact on profitability.
Analysis of the investment of IPO funds. The funds raised by the company will be used for the heavy pressure vessel base construction project, with a total investment of 248.95 million yuan and a construction period of 1.5 years. It reached 50% of the design capacity in the third year, 70% in the fourth year, and 100% in the fifth year. After the implementation of this fund-raising investment project, the annual sales revenue is expected to increase by 391.2 million yuan, with a total annual profit of 74.02 million yuan.
Profit forecast and valuation. We estimate that the EPS of the company from 2010 to 2012 is 0.45,0.63 and 0.90 yuan respectively. Considering the average valuation level of comparable companies, we think that it is more reasonable for the company to have a dynamic price-to-earnings ratio of 35-40 times in 2010, and the corresponding reasonable price range is 15.75-18.00 yuan.