Machinery industry: high growth and high premium for small industry companies

Analysis conclusion
Small industry large companies: 1 The sub-sector industry is relatively small in size and is not valued by international companies. However, driven by factors such as technology upgrades and industrial upgrading, the sub-sector has relatively large growth potential. 2 Company is the only leading enterprise in this sub-sector; 3 Under the premise that international large companies do not pay attention to and small companies can not compete with them in a short time, the company has established through technological advantages, first-mover advantages, technological advantages, etc. Strong industry barriers, and thus long-term enjoy the excess profits of this segment of the industry. The above three characteristics determine that large companies in this small industry can not only maintain high gross profit margins for a long time, but also have the potential to achieve high growth following industry growth.

Qinchuan Development: The only domestic company that produces gear grinding machines, with a domestic market share of more than 50%. Along with the pace of China's mechanical processing to precision upgrade, the segment of the gear grinding machine has entered a period of high-speed expansion. Since the second half of 2009, the company has successfully developed a new market segment for passenger gearbox gear grinding machines, laying the foundation for more than 30% high growth in the next three years. In addition, the research and development of military products such as blade grinders is an unexpected surprise on the basis of high growth of the company. The further expansion of the passenger gear transmission gear grinding market and technology upgrades and product structure upgrades are the main drivers of the company's high growth. We expect the company's net profit growth rate to be 41.74% in the next three years.

Longxi shares: The only company specializing in the production of joint bearings, the domestic market share of more than 60%, the international market share of about 12%. The downstream application areas of joint bearings are expanding from traditional engineering machinery, hydraulics and other fields to new fields such as military, heavy truck, nuclear power, wind power and railway equipment, and the growth momentum is strong. The strong growth of domestic demand and the rapid recovery of exports are the main drivers of the company's high growth. We expect the company's net profit compound growth rate to be 49.50% in the next three years.

Hanzhong Seiki: Leading domestic screw compressor segment industry, the domestic market share of refrigeration compressors is about 35%. Under the double pull of energy saving and environmental protection and consumption upgrade, the demand for domestic screw compressors has expanded rapidly. The further expansion of the market for energy-saving and emission reduction in ground source heat pumps, as well as the expansion of the product chain and industrial chain are the main drivers of the company's high growth. We expect the company's net profit compound growth rate to be 49.73% in the next three years.

Weihai Guangtai: China's largest airport ground equipment manufacturer, the company's aviation ground power accounted for more than 60% of the domestic market share. The sub-sector of airport ground equipment has high security and other qualifications. The rapid development of China's air transport industry, the import substitution of high-end aviation ground equipment, and the expansion of the export market have driven the rapid growth of the industry. With the advantages of resources such as research and development and sales system, high-end products and product chain expansion are the main driving factors for the company's high growth. We expect the company's net profit compound growth rate to be 50.19% in the next three years.

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