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Railway fittings: rising industries outperform rating
Shanxi Chunguang Forging Co., Ltd.   2015-01-20 08:28:45 Author:SystemMaster

Medium and long-term railway network planning made clear in the direction of the construction of the railway network in China, compared to the world's major economies, the network construction of our country has a huge space for development. Invested (including in the eleventh five-year plan of railway infrastructure construction and investment) will reach 1.5 trillion yuan, about four times that of 15 during the period of investment.

High-speed passenger and freight overloading will be a future focus, with the support of national policy in terms of core parts localization, domestic railway accessories products will in the future the emu supporting and overloading upgrade breakthroughs, we believe that the railway accessories company in the future may have big rise space.

Adopts a system of quality certification, the ministry of railways form higher trade barriers, any enterprise production of railway accessories products must be certified by the quality of the ministry of railways, therefore once the enterprise into the supply system of the ministry of railways, shows that the enterprise product quality reached a very high level.

We selected the five railway accessories company, their business scope covers infrastructure related accessories, accessories and railway tracks locomotive vehicle accessories. Times new material products include bridge bearings, the CA mortar and elastic element, basically can meet the railway construction from early and mid to late investment demand different peak; Gem-year industrial products is railway fasteners; Jin west axles, CSR times and tianma stock products are railway locomotive vehicle accessories.

We estimate that 2009-2011 will be a railway accessories industry high-speed development period, we like those who have the industry leading status, capacity expansion, outstanding technical advantages of listed companies significantly. So we recommend times new materials, the jin west axles, tianma shares and CSR times; Due to overvalued, we give the market rating gem-year industrial synchronization.

Investment in this paper,

Rapid economic growth to promote China's railway equipment industry of railway transportation in China has been occupies an important position, 06 railway about bear 34% 34% of the nation's passenger traffic and freight transport. With the rapid development of China's economy, the railway infrastructure construction has lagged behind the economic development of transport demand, and directly lead to railway, strained and capacity shortage, more than 90% of the lines in the seams, and the developed countries more than 1.5 times of operation load. China's huge population base, and vast land area determines the importance of railway transportation. At this stage of railway transportation has become the transportation development mode of China's first choice, especially in the context of energy prices, focus on development of railway transportation, the low energy, low cost, long distance, large capacity and good safety transportation mode has a realistic significance.

In this context, the country put forward to develop the railway transport, therefore has issued a "long-term railway network planning", not only put forward the construction of railway network and implementation for line, also asked the domestic main technology and equipment at or near the international advanced level. At present, China's railway technology and equipment level, on the whole, has certain disparity with the developed country, the technology is still at an early stage of high-speed emu. Medium and long term planning and points out that the ministry of railways will be through the international cooperation, integration of domestic resources and scientific research to realize the localization of railway equipment as soon as possible.

High-speed passenger and freight overloading will become the future focus, with the support of national policy in terms of core parts localization, domestic railway accessories products will in the future the emu supporting and overloading upgrade breakthroughs, we believe that the railway accessories company in the future may have larger rising space, from the long term we liked the small molecule.

We cover the 5 listed companies, in addition to private enterprises gem-year industrial and tianma shares, the remaining three railway accessories listed companies are belong to the larger company's parent company or group, which most of the assets of the parent company is not listed, and the development of the railway industry background, the demand for financing is very large, so we estimate that there are some assets into the possibility of future.

Valuation and rating

In the early period of the railway construction has a strong demand for construction machinery products, the demand of the railway accessories will be released after 8 years, so we think that the 09 p/e ratio will be more reasonable. In the future earnings is expected to rise sharply, railway accessories listed companies in 2009, the average p/e ratio of 26.7 times, slightly lower than the domestic machinery sector 34 times the level of 09 p/e ratio. Under the background of the development of the railway industry, we believe that the sustainable development of the railway accessories listed companies will remain until after 2010, has a comparatively clear profit growth prospects, so we think the railway accessories listed companies exist good investment opportunities. To comprehensively consider the valuation of the domestic equipment manufacturing industry, we believe that the domestic railway accessories industry listed companies 09 30 times the dynamic price-earnings ratio can reflect its reasonable value pricing.

We covered the five railway accessories listed company, is a new material, the jin west axle age respectively, tianma co, gem-year industrial and CSR times electric. Judging from fundamentals, we believe that the era of new material and CSR times electric products, product structure and the independent research and development ability, the strongest and the background of the two companies have CSR group; In addition the jin west axle high-end business prospects are very good, and have an armed group parent company background, the three companies in the future will benefit most of form a complete set of high speed railway, so we give 30 times the 09 goals p/e ratio. Tianma co has developed rapidly, but the proportion of railway bearing business only account for less than 50% of revenue, so we give the firm a 09 28 times the goal of the p/e ratio. Gem-year industrial valuation is too expensive, we do not recommend.

Era as zhuzhou electric locomotive research institute restructured enterprises, the level of new material on r&d are very outstanding, powerful research strength to ensure the company's product line is very rich, and has already covered from the early stages of railway infrastructure, mid rail construction, and eventually the whole process of investment vehicles. We expect the company 07 and 08 earnings per share growth above 100%. Based on 09 30 times earnings, we will target the price was 21.60 yuan, and maintain our outperform rating on the company.

Jin west axle after completion of the purchase axle production capacity will be 280000, up from the current 120000 root root, axle products market share, industry status and pricing power will result in a lot of ascension. We expect the axle products of the company's domestic market share will increase from the current 30% to 50% level, become the industry's absolute leading enterprises. Based on 30 times the 09 goals p/e ratio, we will target price 29.70 yuan, and maintain our outperform rating on the company.

Tianma co is a high-speed growth of the enterprise, with its research and development ability, the technical advantages and outstanding management team, through a series of acquisitions, the company in railway bearings and short cylindrical roller bearing market share ranking the first in the industry. In the next few years the company by capacity expansion and external acquisition into the high-end bearings and machine tool market, we expect the company 07 and 08 profit growth of 41% and 41% respectively, 08 return on net assets of more than 27%, it is expected that the company based on 09 28 times the goal of the p/e ratio, we will target price 132.44 yuan, to maintain our outperform rating.

Gem-year industrial export business despite the export tax rebate and the negative impact of the appreciation of the renminbi, but the domestic high-speed railway construction has brought about great development for the company, in the next few years the company to raise funds to expand production capacity and develop new products, through developing the high-speed rail, electricity and auto accessories products, 08 and 09 will be rapid growth. Based on 09 earnings forecast, the company's p/e ratio has reached 35 times, now overvalued, rating given synchronous the market rating for the first time.

CSR times product technology content is very high, but because of the future companies will take time for new product research and development and debugging, so 7 years sales growth will slow significantly. But with the support of national policy in terms of core parts localization, we believe that the company's products in the future in high power ac drive system and form a complete set of the emu will make a breakthrough, the company's performance in the future may have big rise space. Based on 30 times the 09 goals p/e ratio, we will target price 16.20 yuan, the rating for the first time to give is better than that of the market.

 


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