Introduction to this report:
The leading segment leader in the CNC sheet metal industry has continued to expand its outreach since listing, actively exploring the fields of energy saving, environmental protection, and new energy. The company's strategic transformation path is worth looking forward to. The first coverage gave an “increase in holdings” rating, with a target price of 8.58 yuan.
Key points of investment:
The first coverage gave an “increase in holdings” rating, with a target price of 8.58 yuan. Baoxin Technology is a segment leader in the domestic CNC sheet metal industry. The market is concerned about the “ceiling effect” of the company's sheet metal business and uncertainty about new business development. However, we believe that as orders for wet chemical equipment are implemented one after another, thermal power flexibility peaks, and the electric boiler business begins to become new profit growth points, the company's growth path gradually becomes clear. Considering that the Jingke and Fuxin flexibility tuning projects invested and built last year were put into operation and contributed revenue, the wet chemical equipment industry passed inspection, and the successful delivery of electric boilers, etc., the estimated revenue for 2018-2020 was 915, 1208, 1,607 billion yuan respectively, and the net profit of the mother was 121, 174, and 240 million yuan, corresponding to EPS 0.22, 0.31, and 0.44 yuan. The target price was 8.58 yuan, corresponding to 39 times the PE in 2018, covering the “increase in holdings” rating for the first time.
Actively develop energy saving and environmental protection businesses through acquisitions and equity investments. While maintaining its leading position in CNC sheet metal products, the company continues to promote investment in the field of energy saving and environmental protection: ① the acquisition of Nanjing Youzhi Technology, relying on China's environmental protection and energy saving equipment industry platform, entering the fields of gas flow measurement and control systems, smoke monitoring and boiler combustion optimization; ② introduced German production processes, established equipment production bases, and developed wet chemical photovoltaic equipment for solar crystalline silicon cells. After entering this field, it has generated hundreds of millions of orders, successfully developing high-quality customers such as Tongwei, Zhongye Energy Saving, GCL, etc.
The policy is vigorously promoting the flexibility and transformation of thermal power, and the Fuxin and Jingke power generation peak transfer projects are profitable.
The company cooperated with Swedish high-pressure electrode boiler brand Apani to vigorously develop coal-to-electricity distributed centralized heating and high-voltage electrode boiler technology. As a more mature solution for flexible peak regulation of thermal power, the company participated in the operation of the Fuxin and Jingke power generation peaking projects. Among them, the Jingke project invested a total of 122 million yuan. The company announced that it expects an average annual profit of 60 million, while the total investment of the Fuxin project is 296 million yuan. The installed capacity is nearly three times that of Jingke, and there is more room for profit in the future.
Catalyst: High-pressure electrode boiler peaking accelerates penetration, opening up thermal power peaking projects in other cities
Risk warning: risk of business integration; risk of fluctuations in raw material prices
