Incidents:

The company issued the “2024 Stock Issuance Plan to Specific Targets” and plans to raise no more than 660 million yuan for intelligent control valve construction projects and supplementary working capital. The review is as follows:

Rich customer resources and leading marketing service network. Since its establishment, the company has been engaged in R&D, production and sales of industrial automatic control system devices and complete engineering services. With market accumulation in various fields such as petrochemicals, metallurgy, electricity, etc., as well as high-quality products and good after-sales service, the company has enjoyed a good reputation and wide recognition in the industry, and has established good business partnerships with customers such as CNPC, Sinopec, Wanhua Chemical, CNNC, China General Nuclear Power, and China Baowu. The company has a leading marketing service network in the industry, covering major large and medium-sized cities and key customer groups across the country. More than 1,000 sales and service engineers are deeply involved in the market, and focus on providing customers with high-quality services throughout the process from demand introduction to after-sales service.

It has a rich technical heritage and broad product market space. In terms of technology accumulation, the company has mastered many core technologies such as high-flow anti-vibration valve design and manufacturing technology, low leakage butterfly valve sealing structure design and manufacturing technology, high-pressure differential anti-cavitation valve design and manufacturing technology, and high-temperature steam adjustable ratio valve design and manufacturing technology. In the process of building a modern industrial system, diversified expansion of integrated refining and chemical models, clean and low-carbon development in the coal chemical industry, energy-saving transformation of key energy industries, environmentally friendly relocation of heavily polluting industries, and rapid development of new energy sources have brought an incremental market for industrial automation instruments, and demand for domestic high-performance industrial automation instruments and devices in downstream industries also continues to grow. According to the March 2023 edition of “Control Valve Information”, the sales volume of China's control valve industry exceeded 40 billion yuan in 2022, and the total sales volume of the top 50 was 37.484 billion yuan, up 12.39% from the top 50 in 2021. Its total sales of Chinese brands were 16.637 billion yuan, accounting for 44.38%. Overall, intelligent control valves have good development prospects and market space.

The fund-raising project has broken through capacity bottlenecks, and performance is expected to continue to grow. In 2020-2022, the production capacity utilization rates of the company's intelligent control valves were 96.53%, 105.69% and 102.56% respectively. Insufficient production capacity has become an important factor limiting the company's development. The implementation of this fund-raising project will enable the company to break through the production capacity bottleneck of intelligent control valves, strengthen the company's testing and testing capabilities and design and development capabilities for high-performance products, and help the company's performance grow further.

Profit forecast: The company's net profit for 2023-2025 is expected to be 732, 8.44, and 973 million yuan, respectively, corresponding to PE of 16, 14, and 12 times, respectively. Covered for the first time, a “gain” rating was given.

Risk warning: industry competition intensifies; profit forecasting and valuation models fail