Focus 1: the sales of explosives are stable and the sales of civil explosive equipment are declining
The company is the leader of the civil explosion industry in Hunan Province, with a current production capacity of 169000 tons of explosives, 250 million detonators and 250 million meters of detonating cords, accounting for more than 70 percent of the explosive production capacity in the province. Affected by the decline in the growth rate of fixed asset investment in mining, infrastructure and other industries, the demand for civil explosive products has declined. Due to the higher proportion of initiating equipment used in coal mines, the rate of decline in sales is more obvious. The company's explosive sales are stable, and the production capacity of Chongqing Shenaxe Jintai, a holding subsidiary, has been completely released; the production capacity of Chongqing Shenaxe explosive has been transformed from 12000 tons to 22000 tons in June, and it is expected that explosives will contribute to stable performance in 14 years.
Focus 2: engineering blasting determines the future growth space of the company.
The rapid development period of civil blasting industry has passed, and the development of engineering blasting is the inevitable trend for civil blasting enterprises to break through the bottleneck. The company's H1 project blasting revenue accounted for 1.76% and 1.36% respectively in 2012 and 2013, which is significantly lower than that of the same industry. In 2014, the company will increase its efforts to expand its blasting business. Through the innovation of technology and commodity model, enhance the competitiveness of the company in the field of blasting market. The company has two first-class qualified blasting companies, the breakthrough in the field of engineering blasting will open up the future growth space of the company.
Focus 3: acquire Jinneng technology to realize the integration of industrial chain
In May, the company became the largest shareholder of Jinneng Technology through equity transfer, and in June it acquired Jinneng Technology's shares held by Jinrui Technology, bringing its shareholding ratio to 47.15%. Jinneng Science and Technology is one of the strongest R & D enterprises in the domestic civil explosion industry, and the technical transformation of emulsion explosive production line and the construction technology of on-site mixed explosive ground station are leading in the industry. the company will benefit from the technical transformation of the explosive industry and the rapid improvement of the market space of the ground station.
Focus 4: highway construction projects will increase performance
In July, 13 years, the company won the bid for the highway construction project from Qiyang County to Lengshuitan, which was invested in the form of bank loan and contributed 75 million yuan in income at an annual rate of return of 15%. Through this project, the company will train the team and accumulate experience to lay the foundation for continued participation in highway and urban infrastructure projects.
Conclusion:
The company is the leader of the civil explosion industry in Hunan Province, with explosive production capacity accounting for more than 70% in the province, contributing to stable performance; engineering blasting business currently accounts for a low proportion of income, looking forward to the growth space brought by technological breakthroughs for the company. It is estimated that the company's 13-15 EPS is 0.53,0.60,0.72 yuan respectively, corresponding to PE22, 19, 16 times, maintaining the "recommended" rating.