Category: Money tips Release Date: 2006-09-14
Field Research: January 12, 2007 with the company secretaries to directorate Wang Zhiyong, strategic planning, re-Chun Hung, director of the Xiamen Municipal People's Government of the mayor Ji-filling Town Hall in-depth exchanges and visited the new factory plant. The company's recent business conditions and future five-year development plan to explore and exchange. The basic conclusion that we experienced in 2006 leadership changes and restructuring, the company began to improve operational efficiency, groups and listed companies, a major change in management philosophy, the company has entered an upward channel.
The new leadership to change brought about positive changes: the company hired in August 2006 as the new chairman of Chen Ling, Chen was born in 1953, previously served as group affiliated Yinhua Machinery Factory director, Wang Gong in particular, the newly elected Hung Hing Company The vice president, Wang Gong in particular, who was Xinyu, Xiamen, Xiamen Engineering Machinery Company Chairman. In view of the first 3 quarters of 2006 results for the growth rate much lower than the Liugong, Long industrial and other enterprises, we can speculate the company's performance of this leadership under pressure to large. Ling and Wang Gong-affiliated group in particular came from a subsidiary of such personnel scheduling arrangements that the corporation shares of the Xiamen Engineering Machinery Group positioning has changed. The research was informed that the company's current middle-level assessment of leading cadres to face more pressure to every half a year to organize an evaluation, organizational management task row is full, often need to work overtime. We believe that the leadership change has brought the company to improve operating efficiency has been reflected.
Group listed overseas blocked, to inject the assets of listed companies is expected to strengthen. Xiagong before 2004 have been to Hong Kong-listed group plans, due to the impact of macroeconomic regulation and control of construction machinery industry as a whole benefits decline, overseas listing of group delay, combined with the domestic A-share market in 2006 plates outbreak of construction machinery market, group to inject the assets of listed companies is expected to become intense. Currently the group owns the multi-mechanical components for the engineering assets, especially for supporting parts loader product assets, such as Xiamen Gear Factory, Xinyu Machinery Co., Ltd., Yinhua Machinery Factory, Sanming heavy machinery companies, transportation companies, and so Xiagong . 2005 Xiagong shares, including groups affiliated with the Group's related party transactions between subsidiaries amounted to 745 million yuan, accounting for listed companies, 23.75% of sales. By the end of 2006 Xiagong shares held by the corporation acquired 60% stake in Xiamen Xinyu, bringing Xiamen, Xiamen Xinyu become a wholly-owned subsidiary of industrial shares, by 2006 three quarters of the main business income of a subsidiary of 281.2738 million yuan, Net income for the 12.279 million yuan. Expected full-year net profit of up to 1500 million yuan. Gear factory in Xiamen in 2005 net profit of 3.315 million yuan, the company is currently managed. Yinhua Machinery Factory mainly for industrial buildings to provide hydraulic cylinder matching shares, the annual net profit of more than 10 million yuan. Sanming heavy machinery company mainly produce road rollers and other road construction machinery products industry, the economy has dropped markedly in recent years due to operating conditions less than desirable. Group, a subsidiary of Xiamen Forklift Truck Plant is not due to the scale of production, and product R & D capabilities have not kept pace, so in a low-profit status. Public shares in Xiamen by the end of 2006, three institutions (a one-year employment contracts to sign, firing redundant employees, recruitment of new staff with technical titles, etc.), stripping off non-performing assets and personnel, during 2006 the company spin-off company in Xiamen, metal forming machine , Xiamen Engineering Machinery Xue Fu, Xiamen, Jiande (Quanzhou) Engineering Machinery Company, China and China Construction Machinery big Group, Shanghai Oriental Construction Machinery Leasing Company, Xiamen Dahua Machinery Co., Ltd. and so on non-performing assets at the same time by way of assignment of claims received 461 million yuan in cash. Non-performing assets through the divestiture, the company solidified the quality of existing assets to achieve the traveling light.
Is expected to be refinanced in 2007. Compared LIUGONG, dragon loader work and other production enterprises, the company gross profit margin is low, mainly due to outsourcing of spare parts are a disproportionately large share, more than 70%, resulting in procurement cost is higher than these enterprises. In addition, the company is located in the southeast coast, while the sales market is mainly distributed in north China and central parts of the market, to Chongqing Iron and Steel, Anshan Steel, Shaoguan Iron & Steel purchase steel, Aeolus purchasing tires, diesel engines on the wood procurement, transportation costs than Liugong and Lung Engineering high. As the group shares the positioning of Xiagong change is expected in 2007, the company may be acquired through the refinancing of the components group of assets, reduction of related party transactions and reduce procurement costs. Xiamen Engineering Group now holds 64.84% stake in holding a higher proportion, so we think the company to refinance if implemented, may take additional ways for the public shareholders, the Group companies bridge boxes, gear factory and Yin-hua machinery plant that can be injected into a listed company. Through the acquisition of assets is expected to approach to reducing the profitability of related-party transactions brought about changes in order to enhance gross profit margins 3 percentage points.
Group in the future is no longer involved in construction machinery business. In addition to the above-mentioned group of construction machinery spare parts business, in recent years, two new business is steel and specialty vehicles. Business was initially Steel Corporation for the construction of Xiamen Island Bridge, the sea and into the warehouse of the business, the Xiamen city government promised the next few years relating to the basic steel structure construction projects will be handed over to group. Of special vehicles, including trailers, irrigation-type storage and transport vehicles and forklift truck, special vehicles, the company is currently not yield an annual output of more than 100 vehicles specialty vehicles. Group's strategic plan is a unit of construction machinery will be gradually integrated into the categories of assets of listed companies, the next major development group of non-engineering machinery business.
Company relocation rich land revenue. The island's original factory in Xiamen, including the group included, total of Shah Road, 50000 square meters and the gym annex of 27 million square meters factory area, Total 32 million square meters, land acquisition cost is 300 yuan / square meters, transferred to the Government of Xiamen The price is 2000 yuan / square meters, land revenue 544 million yuan.
As the island's limited size, coupled with the Xiamen city government to manufacturing enterprises moving out of strategic planning, in 2004 Xiagong shares and group as a whole move to off the island's southern industrial zone irrigation irrigation Town, the new site is located Xiamen Engineering Machinery Industrial Park covers an area of 1.35 million square meters, for the nation's largest construction machinery industrial park. Xiagong which shares more than 60 million square meters area, land cost is 90 yuan / square meters, plus the land formation costs, integration costs 150 yuan / square meters, the current market price of land in the region of 500 yuan / square meters, the company added more than 200 million land - yuan. Xiamen Engineering Machinery Industrial Park is currently developing an area of more than 90 million square meters, there are nearly 40 thousand square meters of land yet to be developed, in order to Xiagong shares future business development and reserve a rich land resources.
Loader and export business focuses on upgrading of the structure. Xiamen Engineering Machinery shares loader production in 2001 before the industry was once the highest, since R & D investment due to lack of new products, combined with the company too much emphasis on market share and ranking, cause the Company's loader product output and gross margin and Liugong apart. Three years, the company's future product development loader strategy is to gradually increase the XG953, XG955 sales of high-end products such as the proportion of self-built components and supporting systems to reduce procurement costs, and expand exports.
Company's current capacity of 30000 units loader, its products belong loose material type loader product line in the market, the largest share, accounting for more than 60%. Expected in 2006, 2007, sales of the company loaders up to 17,000 stations and 213 million units. In marketing services, the company products "three guarantees" period of six months from the original extended to a year, in order to optimize the after-sales service is to squeeze through the small and medium enterprises within the industry market share, "three guarantees" extension will bring the cost of sales增加. Additionally, the company in 2007 focused on creating an export market, and hope is located in coastal areas by virtue of its geographical advantage of the expansion of international market share, this company has strengthened its brand awareness, hired a consultant, which also leads to an increase in cost of sales. In addition, in 2006 the company also obtained the right of imports and exports, exports are no longer coming through the group.
Excavator operations in 2008 will enter the earnings period. In 2006 the company sold 189 units excavator, due to inadequate size, is still at a loss situation. Excavator product sales in 2007 is expected to reach 500 units, to achieve break-even in 2008, the company is expected to reach 1,000 units excavator sales, profits. Production of an excavator is currently restricting factor is the hydraulic control system for imports of parts and bottlenecks.
Xinyu Machinery Co., Ltd. mainly produces small-scale engineering machinery. Production of products, including mini-excavators, small loaders and backhoe loader, not current production, but a good momentum of development, the company intends to further integration of the business in the future, improve the product line.
Equity investment future profit margins. Holds legal 37.5 million shares of Societe Generale Securities, such as the Societe Generale Securities listed equity investment income is expected to be more than 200 million yuan.
Xiamen, Xiamen city government attach importance to the future development of industrial shares. SASAC a subsidiary of Xiamen Electrical Engineering Group Holdings of Xiamen, Xiamen Golden Dragon, and Longyan investment, Electrical Group, to build the next few years will focus on the three companies, and to integrate the three companies as a platform for mechanical and electrical asset classes in Xiamen, Xiamen City, as The engineering machinery leading enterprises Xiagong shares in the future will surely be to support all aspects of mechanical and electrical groups.
The next five-year development goals: 2010 revenue reached 100 billion yuan, Xiamen Engineering Machinery Group, the major shareholder of the Group of Xiamen, Xiamen, Electrical and Mechanical Engineering Group, including listed company's overall sales target is 2010 sales revenue reached 100 billion yuan in 2007 reached 5 billion yuan . Vast increase in the company's future business.
Earnings forecasts and investment advice. We assume that in 2007 the company acquired additional group of non-directional bridge boxes, fuel tanks and other parts of assets, in accordance with the proposed acquisition of assets of 36 million yuan of net profit, 5% of the net return on assets is expected to finance 800 million yuan, 20% equity dilution , 2006-2008, the company expects earnings per share up 0.11 yuan, 0.32 yuan, 0.50 yuan, target price 8.00 RMB, 40.85% is currently undervalued, so we give a "buy" rating.
The major uncertainties. Equity incentive progress, the progress of the Group assets, consolidation, steel and other raw materials price fluctuations.
