\u3000\u3000 Zhejiang Huatie Emergency Equipment Science & Technology Co.Ltd(603300) (603300)
China State Construction Engineering Corporation Limited(601668) machinery leasing head enterprise, with a revenue / performance CAGR of 36% / 36% from 2015 to 2020
The company is the head enterprise of China State Construction Engineering Corporation Limited(601668) machinery leasing. Its main business is gradually expanded from building revolving materials. At present, it has formed three plates: building support equipment, aerial work platform and underground maintenance engineering. The revenue accounts for 55%, 31% and 12% respectively in 2020. From 2015 to 2020, the company’s operating revenue and net profit attributable to the parent company CAGR were 36% and 36% respectively, and the gross profit margin and net profit margin were as high as 54% and 26% in 2020.
The traditional main business grew steadily, actively merged and integrated, and improved the layout
Relying on the leasing of building support equipment, the company has been deeply engaged in the industry for more than 10 years, and its leading position continues to be significant. In recent years, the company began to layout the field of aerial work platform and underground maintenance, showing a rapid development trend. At present, the company’s ownership of building support equipment remains the industry leader, the ownership of aerial work platform is the second in the industry, and the construction method and technology of underground maintenance is in the forefront of the industry.
Focus on the aerial work platform and build the company’s core growth point
1) the Chinese market started late and has great potential compared with the mature market in the United States. In 2020, the total number of aerial work platforms in China will be about 241000, with a per capita number of 17000 units / 10000 people, which is far from 730000 units and 221000 units / 10000 people in the United States. By the end of 2021, China’s equipment ownership was about 340000 units, an increase of more than 300000 units compared with 2015, and the CAGR was about 148%. There is at least 3-5 times growth space in the future.
2) the demand for aerial work platforms continues to expand. In 2025, the number of aerial work platforms in China is expected to reach 1 million, and the annual income scale of the rental market is expected to exceed 40 billion yuan, with CAGR of about 31%. As a leading enterprise in the industry, the company will continue to benefit from the rapid growth of the market. In 2020, the company increased the fixed size aerial work platform by RMB 810 million, and the business scale continued to expand. After the project is completed, it is estimated that the annual operating revenue will be 194 million yuan and the average annual net profit will be 72.29 million yuan. By the end of 2021, the net profit of the project has exceeded 50 million yuan.
3) in 2021, the company has 47000 aerial work platforms, accounting for about 14% of the Chinese market. Together with Hongxin Jianfa and Zhongneng, it forms the first echelon in the industry, with outstanding scale advantages. As a leading enterprise in the industry, the company has obvious advantages in asset scale. It can reduce the unit price of equipment through large-scale centralized procurement and achieve cost leadership.
Asset light + digital operation mode, highlighting the company’s management advantages
In the future industry competition, companies will compete for low-cost financing and customer acquisition, so as to achieve high-speed development. 1) In 2020, the company will actively explore the asset operation mode and further improve the market share in combination with the capital advantages of state-owned enterprises. 2) In 2021, the company appointed Peng Jiezhong, former general manager of the shared travel division of ant group, as the general manager of the company to fully implement digital management. The company implements the purpose of improving efficiency as the core, realizes the output of management ability, and further feeds management efficiency and improves its core competitiveness through the improvement of asset management scale.
Profit forecast and valuation
We expect that the net profit attributable to the parent company from 2021 to 2023 will be RMB 480 million, RMB 700 million and RMB 970 million respectively, with a year-on-year increase of 50%, 44% and 38%; EPS is 0.54/0.77/1.07 yuan, corresponding to 26 / 18 / 13 times of PE. The first coverage gives the company a “buy” rating.
Risk tips
The channel layout is not as expected; The rental price of equipment decreased more than expected; Industry competition intensifies; Bad debt risk of accounts receivable; Asset impairment risk
