\u3000\u3000 Jiangsu Shentong Valve Co.Ltd(002438) (002438)
Events
On February 13, 2022, the company announced that it planned to acquire the controlling equity of Dewei shares through the combination of transferring the existing shares of Dewei shares and increasing the capital of Dewei shares in cash.
Comments
Continue to expand the valve market and become an industry leader. Dewei Co., Ltd. is one of the well-known enterprises in China’s valve industry. It has long cultivated the overseas market and has strong market channel and product advantages in the field of petroleum and petrochemical. After holding Dewei Co., Ltd., the company will help the two companies form synergy, give full play to their complementary advantages in products, technology, market channels and other aspects, and achieve mutual benefit and win-win results. The company specializes in the R & D, production and sales of industrial special valves, and has accumulated a lot of experience in technology, especially in the localization of nuclear butterfly valves, nuclear ball valves, nuclear flanges and forgings. The company continues to promote the improvement of old products and the development of new products, and actively expand the general valve market while meeting the market demand of high-end special valves, which will provide greater space for performance growth.
Globalization has accelerated, and “two wheel drive” has increased performance. After the acquisition of Dewei shares, the company will further strengthen the overseas business layout, help the company further develop market channels, enrich product lines, and accelerate the layout and expansion of the company in overseas markets and petroleum and petrochemical fields. The company is expected to accelerate the performance growth in the field of petroleum and petrochemical by virtue of the product advantages of Dewei Co., Ltd. + overseas market channels. The performance growth in the field of chemical industry will slow down in 2020. With the improvement of product competitiveness and the expansion of market channels, it is expected to promote the sustained and rapid development of the company.
Business extension in the petrochemical field, “environmental protection upgrading” promotes development. The company extended from product manufacturing to product service, won the bid and completed the guarantee and maintenance project of Sinopec Zhongtian hechuang instrument valve frame, and achieved good results. The company seizes the opportunities of rectification and relocation of chemical parks and environmental protection upgrading and transformation of a large number of chemical enterprises, actively expands new types of valves, and has been applied to major projects and enterprises. Business extension and new valve expansion are expected to provide a greater driving force for the company’s performance.
Profit forecast and investment rating: considering the expansion of overseas market channels and the company’s fundamentals, we raised our profit forecast. It is estimated that the net profit attributable to the parent company from 2021 to 2023 will be 310 million (the former value is 290 million), 400 million (the former value is 360 million) and 540 million (the former value is 460 million), and the corresponding PE will be 25.61, 19.40 and 14.45 respectively. We will continue to focus on recommendations and maintain the “buy” rating!
Risk tips: industry development policy risks; Market development risk; Management and control risks faced after the expansion of business scale; The formal transaction agreement remains to be reviewed and determined, and there is a risk of suspension or termination of the transaction.
