Core Conclusions
Localization integration is accelerating, and domestic market share is expected to increase. KM has advantages in technology and brands. This time, the integration with Tianhuayuan promotes the speed of KM localization, and its service response advantages to overseas competitors are highlighted. With subsequent localization of components, the cost performance ratio for domestic brands is highlighted. The domestic high-end market share is expected to increase, and domestic business growth is high.
Overseas economies have recovered, and downstream KM demand has improved. KM Group has directly benefited from the recovery of manufacturing in developed economies such as Europe and the US, and overseas business is expected to achieve high growth in the next two years.
KM products lead the intelligent manufacturing layout and will benefit from manufacturing upgrades in the future. KM Group has been committed to the application of Industry 4.0 in the plastics processing industry for many years, and has accumulated a strong first-mover advantage in hardware equipment intelligence and industrial data collection. We believe that in the future, KM will significantly benefit from the improvement in downstream intelligent manufacturing levels.
Sinochem Group's high-end intelligent equipment platform has a lot of room for subsequent expansion. This acquisition and integration strengthens Tianhuayuan's position as an equipment platform for Sinochem Group. We believe Sinochem Group is expected to continue to promote the acquisition and securitization of high-quality assets in the future, and there is huge room for Tianhuayuan to expand as a core platform.
For the first time, the “purchase” was covered, with a target price of 13.50 yuan. We expect the company's net profit for 2018-2019 to be 457 million yuan and 548 million yuan respectively, corresponding to earnings of 0.45 yuan and 0.54 yuan per share. The target price is based on the expected price-earnings ratio of 30 times in 2018.
Risk warning: slowdown in downstream demand, exchange rate risk, etc.
