Main points of investment:
The company's operating income is stable and its profitability is in the forefront of the industry among its global competitors. The company's operating performance and profit level remain stable, the compound growth rate of operating income in 13-15 is about 6%, the company's gross profit margin is stable at 25%, and the net profit rate is stable at 11%. In 16 years, Q1-Q3 achieved operating income of 360 million and net profit of 40.99 million, both up 1% from the same period last year. At present, the company has a low market share in the global market, but its profitability is in the forefront of the industry among its global competitors, and there is more room for growth in the future.
With advanced technology, the company has entered the first echelon of global steel ball manufacturers and actively participated in overseas competition. The company's scientific research technology and product quality are in a leading position in the industry, and it is the only domestic steel ball enterprise that has entered the global procurement system of SKF Group, which is the first of the eight multinational bearing manufacturers. Steel ball products are supplied to high-end customers in the global bearing manufacturing field. In overseas markets, it competes directly with Enen Company of the United States, Chunnakima Company of Japan and ASK Steel Ball. Set up a branch in the United States to strengthen overseas services while releasing the capacity of domestic factories in Asia.
The overall market demand for bearing rollers is stable, and the company's new business tapered rollers have a lot of room for future growth. The roller market distribution is consistent with the bearing distribution, the overall demand is expected to be stable in the future, and the market size is expected to be 25 billion. Bearing steel balls currently contribute 99% of the company's business income, mainly used in motor vehicle manufacturing, precision machine tools, light industrial appliances and other light load fields. As for the application and heavy load of high-end tapered rollers, due to the relatively high technical difficulty, only a few domestic enterprises can produce them. The tapered rollers developed by the company have reached the precision requirements of II tapered rollers, and mass production has been realized. With the development of high-speed rail, rail transit and aviation equipment, the company's new business of high-end tapered rollers will face greater demand in the future.
The company expands its production capacity and embraces high performance growth in the future. From 2011 to 2015, the company's capacity utilization has been close to saturation, limiting the company's performance growth. The company through IPO and private placement to raise funds to vigorously expand production capacity, capacity expansion brought about by revenue increase will lead the company to usher in high performance growth. After the completion of the fundraising project, the steel ball production capacity is expected to increase by 74% compared with the end of 2015, with an additional annual production capacity of 355 million rollers. With the completion of fund-raising projects and the production of new production capacity, the next four years will usher in a period of performance growth.
Profit forecast and investment advice. It is predicted that the EPS of 16,17,18 years is 0.44, 0.54, 0.63 respectively. The profitability of A-share listed companies in downstream bearings is poor in recent years, and the comparability of industry valuation is poor. Considering that the company is the only listed company in the field of bearing rolling subdivision, the leader of the domestic bearing rolling system manufacturing industry, the global bearing rolling system making first-class enterprise, the company's market capitalization is small, and the future development prospect is broad, give the 17-year forecast PE80 multiple valuation, the target price 43.2yuan, give "increase" rating.
Risk hint. The construction progress of the new project is lower than expected; competitors seize the new market ahead of time; and the demand for downstream bearings is weak.
