\u3000\u3 China Vanke Co.Ltd(000002) 960 Jade Bird Fire Co.Ltd(002960) )
Key investment points
Event: the work safety committee of the State Council printed and distributed the national fire control work plan during the 14th five year plan.
Benefits from leading enterprises: the industry is becoming more and more standardized and valued, the market competition pattern is continuously optimized, and the concentration of leading enterprises is further improved.
Due to the high degree of homogeneity of the products themselves and the lack of intuitive feeling for end users, the fire products industry has always faced the risk of price war in the past development process, and the competition pattern of the industry is relatively bad. Since 2020, on the one hand, the prices of raw materials and labor have continued to rise, squeezing the profits of the industry; On the other hand, most of the current fire-fighting products are loaded with chips. The shortage of chips further reduces the living space of enterprises. It is rare for the whole industry to usher in the opportunity of reshuffle, and the advantages of leading companies are gradually revealed. After the implementation of the national fire protection work plan of the 14th five year plan, the degree of industry norms and product standards will be further improved, the degree of industry reshuffle is expected to intensify, the market concentration will be further improved, and the leading market share and leading position will be further consolidated.
Development of the company: from business scale to organizational structure, the prototype of an integrated platform for international fire products has emerged, with strong growth certainty.
Business scale: from 2016 to 2021, the company’s revenue increased from 1.3 billion yuan to 3.9 billion yuan and the net profit attributable to the parent company increased from 280 million yuan to 530 million yuan. According to our calculation, by 2024, the company’s revenue scale was close to 10 billion yuan and the net profit attributable to the parent company exceeded 1 billion yuan, and the prototype of large-scale comprehensive fire product platform appeared.
Organizational structure: the latest board of directors and senior management members of the company: 1) Hu Xiaohui, deputy general manager, once served as deputy director of sales in China of LG Electronics (China) Co., Ltd., director of fire business of building products division of Siemens (China) Co., Ltd., director of sales in China of Tyco Fire of Johnson Controls (China) Investment Co., Ltd., and has rich experience in market development, industry application and management of fire industry. 2) Qiu Zhiheng, deputy general manager, has been engaged in the fire protection industry for nearly 30 years. He has been deeply engaged in the independent innovation and R & D of automatic fire extinguishing products, participated in the formation of a number of patents and won many scientific and technological awards. He has long been committed to the application and promotion of fire protection in the industry, and has rich solution experience in communication, electric power, rail, petrochemical and other industries. 3) According to the public information of the company’s investor relations interactive platform, the former person in charge of production and manufacturing standards of Honeywell Greater China also joined the company to be responsible for product technology and R & D. To sum up, the best talents in the fire products industry are gathering in the company. From business scale to organizational structure, the company has developed into the prototype of an international and comprehensive fire product platform, with strong growth certainty.
Profit forecast and investment rating: we expect the company’s EPS to be 2.02, 2.74 and 3.67 yuan respectively from 2022 to 2024, and PE to be 21, 15 and 11 times respectively, maintaining the “buy” rating.
Risk tip: the decline of industry demand and the intensification of competition lead to the continuous decline of product price and gross profit margin
