Main points:
In the environment of capacity loss, traditional manufacturing industries such as iron and steel and coal have entered a comprehensive contraction stage, which directly leads to the narrowing of the downstream channels of waste heat boilers, pressure vessels and other products, and it is difficult to resolve the market impact in the short term. The sales performance of traditional industrial products of sea and land heavy industry will continue to show a downward trend in the near future, but the existing technology and experience provide a good technical basis and a certain space for capacity expansion for the company's production of environmental protection processing equipment and nuclear pressure equipment. it will be helpful in the process of exploring new performance growth points.
Marine and Land heavy Industry further distributes the field of environmental protection through the acquisition of Gerry Environment, and it is also an effective means to cope with the market fluctuations of traditional industrial equipment products under the background of capacity loss. The sustained and rapid growth of the environmental protection industry, sufficient market space and potential business synergy advantages provide the company with a feasible development path. Considering that the acquired companies have stable and good operating capacity, the higher gross profit margin of the environmental protection business will also be beneficial to improve the sustainable profitability of sea and land heavy industry. we believe that the environmental protection engineering and environmental protection equipment manufacturing business of sea and land heavy industry has become a new performance growth point of the company and will continue to have a positive impact on the overall performance of the company in the near future.
At present, the rapid deployment of nuclear power construction in China has led to the growth of the demand for nuclear power equipment and promoted the common development of the upstream and downstream of the nuclear power industry chain. Sea and land heavy industry has mastered excellent nuclear power equipment manufacturing technology and mature manufacturing experience, excellent product quality and high recognition, which makes it occupy a place in the nuclear power equipment market and have a relatively stable and sufficient source of orders. With the approval of a new batch of nuclear power plant construction indicators and the completion of the company's nuclear power capacity adjustment, the nuclear power equipment business of land and sea heavy industry is expected to pick up growth and become a new bright spot of the company's future performance.
Investment advice:
The impact of capacity loss has had a big impact on the company's traditional main business, and its performance is expected to decline in 2016. However, the company's attempts in the field of environmental protection are expected to have a positive impact on performance in the near future; in the favorable environment of the overall construction and deployment of national nuclear power, the company's nuclear power equipment business will also pick up growth and become a new performance bright spot. We estimate that the EPS of marine and land heavy industry from 2016 to 2017 will be 0.126 yuan and 0.178 yuan respectively, and the corresponding PPUBE will be 69.79 times and 49.48 times respectively. The company's valuation is more balanced in terms of the current median of 64.33 times the median Pamp E in the thermal power equipment industry. Considering the performance potential of the company in the nuclear power sector, we give it an "overweight" investment rating for the first time.
Risk Tips:
As a result of the impact of capacity loss, the company's traditional main business continues to shrink; business expansion in the field of environmental protection is not as expected; photovoltaic power plant construction business development is not as expected; national nuclear power deployment slows down, nuclear power equipment capacity adjustment is lower than expected; nuclear power safety accident risk.