Dalian electric porcelain and electric injection porcelain industry ranks first among the four domestic companies qualified for the supply of UHV porcelain insulators, and is the largest disk-type suspension porcelain insulator production base in China. The continuous heat of UHV construction and the expansion of overseas markets will ensure the steady growth of the company's performance in the next three years.
Main points of investment:
The popularity of UHV construction continues, this year and next year is the peak of UHV bidding, and the next two years are the peak of UHV construction. The first batch of UHV projects in the 13th five-year Plan are being carried out as planned, and 27 UHV and four international lines will be completed by the end of the 13th five-year Plan. This year and next year will be the peak period of UHV bidding, and 2017-2019 will be the peak period of UHV construction. In the next five years, the market space for UHV insulators will be about 14 billion (according to the investment of each UHV insulator accounts for about 2%, porcelain insulators account for 55%, glass insulators account for 30%, composite insulators account for 15%, and UHV investment is calculated at 700 billion). According to the company's 30% market share, UHV insulators contribute an average of 400 million to 500 million in revenue per year. The tripod of three kinds of insulators in UHV project can not be replaced completely. Porcelain suspension insulator is a traditional high voltage transmission insulation equipment in China, which has the most mature technology and the largest number of operation. In previous years, UHV suspension insulators only contributed 200 million to 300 million revenue per year for the company, and the revenue growth rate of UHV insulators is expected to exceed 50%.
Industry status: the company's UHV porcelain insulator market accounts for about 30%, the competition pattern is stable, the industry position is stable. At present, there are mainly four domestic UHV AC / DC line insulator suppliers, Dalian Electric porcelain, NGK Tangshan Electric porcelain, Suzhou Electric porcelain, Inner Mongolia Jingcheng. The company has a strong competitive advantage in UHV transmission project suspension insulators, the previous bid quota accounted for more than 30%, the number and amount of bid winning industry first. The production capacity and output of porcelain insulators for transmission lines rank first in the industry, accounting for about 30%. The company's revenue of suspended porcelain insulators accounts for more than 70% of the total revenue, and UHV porcelain insulators account for more than 50% of the revenue of suspended porcelain insulators, which has become the most important business segment affecting the company's performance. The company pays attention to R & D investment, the railway CRCC certification of new R & D products composite bar products will be completed about October this year, and the 840KN high-strength suspension insulator products independently developed by the company have been put into trial operation. In the next three years, the company is expected to continue to maintain the leading position in the electric porcelain industry, and benefit from the accelerated construction of UHV, steady growth in performance.
Export status: the company's export revenue in 2016 is expected to exceed 200 million yuan, completely get rid of the impact of anti-dumping and special protection, and return to the historical peak. Benefiting from Belt and Road Initiative, the company has expanded its overseas markets smoothly and its overseas revenue has increased significantly. The company independently develops overseas markets and strengthens product promotion and market expansion.
Its insulator products have entered 50 countries and regions such as Pakistan, Iran, Ecuador, Spain, Russia and so on, especially in India. This year, the company set up PT.KSI-DALIAN INSULATIOR as a joint venture in Indonesia's inappropriate KSI company, with a 30% stake and a layout to open up the Southeast Asian market.
Change of equity: a substantial change takes place in the control of the company. Liu Guixue, the former actual controller of the company, retired in March this year, and the company has changed into a professional manager management model. On September 19, 2016, a major change of controlling stake took place in the company. Funing rare earth Yilong Magnetic material, with 1.12 billion yuan, was transferred to Mr. Liu Guixue's 4000 shares of the company, and finally 19.61% of the holding company became the actual controlling party of the company. Yilong Magnetic material is mainly engaged in the production and sales of magnetic materials, the sales of rare earth products and chemical products, etc., and the core assets of the company's actual shareholders are also the rare earth industry. In the future, the company is expected to open up new performance growth points and open up market space outside the insulator business.
Order situation: the company currently has more than 200 million UHV orders on hand, and the net interest rate in the first half of 2016 has exceeded the net profit of 2015 by about 20%. The company's revenue in the first half of 2016 was 375 million, of which more than 200 million yuan was contributed by the UHV suspension insulator business, accounting for more than half of the total revenue.
At present, the company has about 223 million yuan in UHV orders, of which about 90 million is expected to confirm revenue in the second half of this year. The company's performance in 2016 is expected to make a big leap.
Investment suggestion: without considering the major adjustment of the business structure, it is predicted that the EPS of the company in 16-18 will be 0.52 PE and the corresponding PE will be 45.56 peaked, UHV construction has entered the bidding peak, and the company will be given 50 times PE next year, corresponding to the target price of 30.66 yuan.
Risk hint: the progress of UHV projects is not as expected, and overseas expansion is not as expected.