Main points of investment:
Benefiting from the westward shift of non-ferrous metal production capacity, the lifting equipment business has warmed up; the industrial chain has been expanded to the power company's original main business of material handling equipment based on lifting equipment, and the company's previous coal preparation equipment and iron and steel smelting cranes accounted for a large proportion of revenue. Affected by the downturn in the iron and steel industry, the company's profits remained at a low level from 2012 to 2014. The company is shrinking the share of revenue in the steel industry, which currently accounts for only 2% of total revenue. Benefiting from the continuous recovery of aluminum smelting cranes and the acquisition of Huaxin Machinery and Machinery in 2015, the net profit of home ownership increased by 496% to 82 million yuan compared with the same period last year, and continued to increase by 72% in the first three quarters of 2016. The annual results forecast to achieve a net profit of 100 million to 150 million, an increase of 23% to 53%.
The warming of aluminum smelting crane is mainly caused by the westward shift of non-ferrous metal production capacity, the electricity price of western cities is obviously lower than that of eastern cities, and the power cost accounts for about 1/3 of the cost of aluminum smelting, therefore, a large number of aluminum smelting capacity has been relocated from the east to the west, which has brought a lot of equipment demand. Reflecting the company's profit performance, the gross profit of the aluminum smelting crane business increased by 58% in the first half of 2016 compared with the same period last year. Aluminum smelting equipment is expected to maintain steady growth.
The company acquired Huaxin Mechatronics in 2015, which is mainly located in customized power and port handling, and extends the equipment industry chain to areas other than non-ferrous materials. The original shareholder of Huaxin Machinery and Machinery is Huadian Institute of Electrical Sciences, which has good experience and reputation in the power system, and its customers include Huaneng, China Resources and other large customers. And actively rely on Belt and Road Initiative to expand overseas customers, revenue and orders are expected to increase significantly this year. And Huaxin mechanical and electrical mergers and acquisitions profit commitment for 2015-2017 not less than 65 million yuan, 67.6 million yuan, 71.2 million yuan, which also provides a certain degree of protection to the company.
The business of three-dimensional parking garage has entered a high growth stage.
Three-dimensional parking garage is another direction of the company's industrial chain extension. The company and Shenzhen Zhongke Liheng Garage equipment Co., Ltd. and other companies jointly invested in the establishment of Tianqiao Liheng Company, the main three-dimensional parking business, the company accounts for 50%. Relying on China Ke Liheng's leading technology and the company's regional advantages, Tianqiao Liheng won the tender for Hunan Tianyi Group's three-dimensional garage in 2016, with about 400 parking spaces, with a total amount of 44.5 million yuan. After the smooth implementation of the project, it will play a significant exemplary role and help the company to further expand the regional market. The local parking space gap in Zhuzhou is about 30,000, which will bring 20-3 billion three-dimensional parking market space. We expect that after the company's first project is put into use, the three-dimensional parking garage business will enter a period of high growth.
New energy vehicle business has gradually become a strategic focus.
The company regards the new energy vehicle industry chain as an important development direction, which is mainly carried out in three aspects: 1) the company holds a 5.95% stake in Inbol Electric Co., Ltd., plus the management's equity, a total of 9.91%. Inbor's main motor controller has a high market share in medium and low-speed electric vehicles, and gradually reached a supply relationship with Shaanxi Tongjia, Lifan and other vehicle factories; 2) the company cooperated with Inbor to develop the "electric car drive integration" project, which has produced a prototype and started testing. 3) the company jointly set up an industrial investment fund with Guangzhou Nanyang New Energy Co., Ltd. And Guangdong Guangdong Yueke Innovation Venture Capital parent Fund Co., Ltd., with a total size of 300 million yuan and a down payment of 174 million yuan. Mainly for the field of power batteries.
From the layout of the company in the new energy vehicle industry, the company regards this direction as the key investment direction, and is expected to gradually show up in the proportion of total investment and total income in the future.
Profit forecast and investment rating: the company's EPS from 2016 to 2018 is expected to be 0.15,0.22,0.27 yuan respectively. The corresponding PE is 43 times, 29 times and 24 times respectively. We are optimistic about the development of the company in three-dimensional garages and new energy vehicles, and are optimistic about the expectation of state-owned enterprise reform, covering it for the first time and giving the company a "buy" rating.
Risk hint: new energy vehicle policy does not meet expectations; non-ferrous infrastructure does not meet expectations; state-owned enterprise reform does not meet expectations