Summary of the report:
We believe that the increase in demand for flat knitting machine mainly comes from the renewal demand, which is continuous. At present, the knitting flat knitting machine equipment industry is the same as many mid-stream products, which began to rise in 2008, reached a peak in 11 years, reached a low point in 15 years, and reached a high point of about 1max 3. The renewal cycle of the flat knitting machine is about 8-10 years, and the equipment in 2008 or so enters the renewal cycle. This round of renewal is rigid and continuous. Judging from the changes in the company's revenue, flat knitting machine equipment increased by 38% in 16 years compared with the same period last year, and the update has already begun. The order for knitting machine equipment is full at present.
The market potential of shoe upper machine is huge, and the market space is estimated conservatively to be about 24 billion yuan. The growth of the upper machine comes from the increase in permeability brought about by the replacement of the original shoemaking process. In 12 years, Nike Inc launched the first woven upper sneakers, and then other manufacturers launched the same craft sneakers one after another. although the unit price was high, sales continued to rise and gradually infiltrated to second-and third-tier cities. We estimate the market space by two methods. It is estimated that the demand for upper knitting equipment is 13-140000 sets, and the market size is about 10 billion yuan. According to the 8-year renewal cycle, the annual market demand is about 17000 units. Cixing, as the leader of this industry, has entered the mainstream manufacturers in China.
Equipment revenue gradually picked up, and the net interest rate improved. Affected by the industry recession from 2014 to 2015, the company's net interest rate declined rapidly, and as the company's equipment revenue gradually picked up on a large scale, the net interest rate will return to the normal level of about 20%. The company has plenty of cash on hand, about 1.3 billion yuan, which can generate financial income every year. At the same time, the company's asset-liability ratio is very low. Judging from the personnel situation of the company in recent years, it has dropped from a peak of 3252 to the current 1140, and the expense rate has dropped, further improving the company's profitability. The system integration business is expected to reverse losses this year, and the mobile Internet plate is expected to complete the expected profit of 100 million yuan.
Investment advice and rating: the company's net profit from 2016 to 2018 is expected to be 130 million, 270 million and 400 million respectively, EPS is 0.16,0.34,0.5 yuan respectively, and the price-to-earnings ratio is 70 times, 33 times and 22 times respectively.
Risk hint: flat knitting machine and shoe upper machine sales are not as expected; mobile Internet performance is not as expected.