One of the leading companies in China's power generation equipment. The company is one of the three oligarchs of China's complete sets of power generation equipment. From January to June 2011, the company's main business income was 33.72 billion yuan, 10.7% year-on-year. Among them, high-efficiency and clean energy accounted for 46.5%, industrial equipment accounted for 29.6%, modern service industry accounted for 19.3%, and new energy accounted for 8.7%.
The demand for traditional products has steadily increased. In the field of thermal power, the company is in a three-pronged situation with the East Power Group and the Harbin Power Group. The three companies account for approximately 80% of the thermal power market. We estimate that the annual new thermal power unit will be about 56 million KW during the “12th Five-Year Plan†period, and the company’s demand for traditional thermal power products will remain stable.
The resumption of nuclear power next year will benefit the company most significantly. The company is the most digested and absorbed company in the Chinese AP1000 technology. Among the 9 digestion and absorption projects, the company digested and absorbed 6 items, of which 4 products were exclusively digested and absorbed. We expect that the new "Nuclear Safety Plan" will be issued in 2012 and nuclear power projects will be resumed for approval next year. The new project will be mainly AP1000.
Cooperate with Siemens to seek dominance of offshore wind power. The installed capacity of offshore wind power in Europe is 4 million KW, and 138 million KW is under construction. China's offshore wind power has been tendered for 1.1 million KW, with a potential capacity of 200 million KW. In the European offshore wind power market, Siemens’ market share reached 71%; in the Chinese market, the company’s market share was 32%. It is expected that after the cooperation with Siemens, the company’s market share of offshore wind power in China will continue to increase.
The expansion of overseas markets was strong and gradually entered the high-end market. The entire power plant equipment manufacturing market presents a “three major, three medium, and three small†competitive landscape. China’s three major power groups are currently in the third tier. The company was involved in the overseas EPC market earlier. The project has been distributed in more than 20 countries and is preparing to enter the high-end market that was monopolized by European and American giants in the past. From January to June 2011, the company's EPC projects had an order of 114.7 billion yuan, an increase of 26.7 billion yuan from the end of 2010.
Earnings forecasts and investment advice. We expect the company's earnings per share for 2011-2013 to be 0.28 yuan, 0.32 yuan and 0.35 yuan respectively. Based on the relative valuation methods of PE, PB and Haitong DCF absolute valuation results, we believe that the company's reasonable share price range is 5.76-6.86 yuan, which corresponds to the 2010 static PE range of 26.18-31.18 times, and the 2011 dynamic PE range is 20.57-24.50. Times, the dynamic PE range in 2012 was 18.00-21.44 times. There is still room for 14%-35% upside, giving an investment rating of “overweightâ€.
The demand for traditional products has steadily increased. In the field of thermal power, the company is in a three-pronged situation with the East Power Group and the Harbin Power Group. The three companies account for approximately 80% of the thermal power market. We estimate that the annual new thermal power unit will be about 56 million KW during the “12th Five-Year Plan†period, and the company’s demand for traditional thermal power products will remain stable.
The resumption of nuclear power next year will benefit the company most significantly. The company is the most digested and absorbed company in the Chinese AP1000 technology. Among the 9 digestion and absorption projects, the company digested and absorbed 6 items, of which 4 products were exclusively digested and absorbed. We expect that the new "Nuclear Safety Plan" will be issued in 2012 and nuclear power projects will be resumed for approval next year. The new project will be mainly AP1000.
Cooperate with Siemens to seek dominance of offshore wind power. The installed capacity of offshore wind power in Europe is 4 million KW, and 138 million KW is under construction. China's offshore wind power has been tendered for 1.1 million KW, with a potential capacity of 200 million KW. In the European offshore wind power market, Siemens’ market share reached 71%; in the Chinese market, the company’s market share was 32%. It is expected that after the cooperation with Siemens, the company’s market share of offshore wind power in China will continue to increase.
The expansion of overseas markets was strong and gradually entered the high-end market. The entire power plant equipment manufacturing market presents a “three major, three medium, and three small†competitive landscape. China’s three major power groups are currently in the third tier. The company was involved in the overseas EPC market earlier. The project has been distributed in more than 20 countries and is preparing to enter the high-end market that was monopolized by European and American giants in the past. From January to June 2011, the company's EPC projects had an order of 114.7 billion yuan, an increase of 26.7 billion yuan from the end of 2010.
Earnings forecasts and investment advice. We expect the company's earnings per share for 2011-2013 to be 0.28 yuan, 0.32 yuan and 0.35 yuan respectively. Based on the relative valuation methods of PE, PB and Haitong DCF absolute valuation results, we believe that the company's reasonable share price range is 5.76-6.86 yuan, which corresponds to the 2010 static PE range of 26.18-31.18 times, and the 2011 dynamic PE range is 20.57-24.50. Times, the dynamic PE range in 2012 was 18.00-21.44 times. There is still room for 14%-35% upside, giving an investment rating of “overweightâ€.
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