Core views:
Incident & Comment: On May 15, the company issued an announcement to obtain a notice of winning the bid for a special customer fire engine. The winning bid amount was 375 million yuan, accounting for 15.6% of the audited revenue in 2023. The winning bid for a fire engine is the company's largest order in a special market since June 2021. Referring to the company's announced contracts and winning bids since 2021, the contract won a large amount and is expected to have a positive impact on the company's operations. According to the announcement, winning the bid for the fire engine will further enhance the company's market competitiveness and brand influence, and open up more market space for the company's emergency rescue equipment industry.
Core investment logic: (1) Airport & emergency rescue special equipment leader. It focuses on the “dual main business” of airports and emergency rescue equipment. It has a complete range of airport equipment products, leading domestic market share, and remarkable advantages in electrification products. The emergency rescue equipment industry covers a wide area, and the layout of multi-rotor heavy-duty fire rescue drones extends from the ground to the air; (2) expand downstream based on product pipeline logic, with both domestic and international layouts to open up market space. Expand downstream application fields based on deep cultivation of ground special vehicle technology and products, and open up a broad market space. Airport equipment benefits from the recovery of domestic and international civil aviation, emergency rescue equipment benefits from trillions of treasury bonds, and the low-altitude economy can be expected to increase; (3) convertible bonds support capacity construction & intelligent transformation. According to the 23 annual report, in 2023, the company successfully issued convertible bonds to raise 700 million yuan in capital, which strongly guarantees the smooth construction of the emergency rescue industrial base and the Yangting intelligent transformation project, and capacity construction supports strong downstream demand.
Profit forecast and investment advice: EPS is expected to be 0.56/0.76/0.96 yuan/share in 2024-2026, respectively. Taking into account the company's leading position in special vehicles, it is expected to benefit from the rising domestic and international civil aviation boom, the increase in trillions of treasury bonds, and the low-altitude economic layout. In 2024, orders and product deliveries are expected to recover and achieve relatively rapid growth. Referring to comparable company valuations, the company is given a PE valuation of 25 times in 24 years, corresponding to a reasonable value of 14.10 yuan/share, giving it an “increase in holdings” rating.
Risk warning: Risk of market development falling short of expectations, major industry policy adjustments, and price fluctuations of raw materials and products.