Investment summary
The company's core business is rail fastener non-metallic components. Xianghe Industrial Company's main products include track fastener non-metal parts and electronic components accessories products, in which track fastener non-metal parts is the company's core business, accounting for about 90% of the company's revenue, mainly including nylon parts, rubber parts, WJ8 elastic plates and plastic parts. The company grew well in previous years, but declined in 2016. from 2013 to 2015, the company's operating income increased from 180 million yuan to 315 million yuan, and net profit increased from 36.34 million yuan to 89.28 million yuan. In 2016, the company's revenue was 262 million yuan and net profit was 74.12 million yuan. In 2016, the company's revenue and profits declined, mainly due to changes in the railway construction and product delivery cycle.
The construction of railway and urban rail transit is at the peak, and the market space of track fasteners is large. The rail fastener is the part that connects the rail and the pillow rail on the track, including metal parts and non-metal parts. At present, rail fasteners are mainly used in railway and urban rail transit. We estimate that from 2017 to 2020, there will be 294 million sets of railway fasteners and 26.33 million sets of urban rail transit. The overall market space is still huge. The supply pattern of the whole industry is stable, the market concentration is high and the gross profit margin is high.
Sufficient orders to expand production capacity and explore horizontal development. At the end of June 2017, the company had an order of 373 million yuan, together with the new order obtained in July, the contract amount of the company reached 580 million yuan, the overall order of the company was sufficient, and the company's fund-raising projects mainly expanded the production capacity of the main business. At present, the company is also exploring horizontal development, including the research and development of fastener products suitable for heavy haul railway, urban rail transit and passenger and cargo blending, while maintaining good cooperation with the company's largest customer, Zhongyuan Lida, actively expand cooperation with other rail fastener integrators.
Profit forecast
It is predicted that the company's sales revenue in 2017, 2018 and 2019 will be 2.90,3.44 and 439 million yuan respectively. The net profit belonging to the parent company is 0.82,1.03 and 133 million yuan, and the EPS is 0.65,0.82,1.06 yuan.
First coverage, no rating for the time being.
Risk hint: railway construction slows down and customer concentration is too high