Liangxin Electric (002706) Investment Value Analysis Report: Accumulate Multiple Development Cycles

Liangxin Electric (002706) Investment Value Analysis Report: Accumulate Multiple Development Cycles
Core point of view The company is a sparse mid- to high-end low-voltage electrical appliance. It has accumulated its own research and development technology, complete direct sales service system, and deeply binds high-quality customers in the downstream high-boom industry. It is expected to break through domestic brands in the high-end sector. Net profit in 2019 is expected to be 2.82% (+ 27%), giving 25 times price-earnings ratio, the first coverage given a “buy” rating.   R & D and customer advantages create the future leader of low-voltage electrical appliances.The company has been cultivating the low-voltage electrical industry for 20 years and is a domestic brand of high-end and low-voltage electrical appliances. In 2018, the company achieved operating income of 1.6 billion yuan, with a market share of approximately 5% in the high-end market.The company focuses on the development of low-voltage electrical products. With a complete series of low-voltage electrical products, the downstream covers six major areas, including new energy, information and communication, intelligent construction, industrial control, industrial construction, power, and overseas development. The main customers are the heads of the above fields.Enterprises 佛山桑拿网 and companies rely on high development response speed, high cost performance and perfect service network to deeply bind high-quality customers and enjoy the double prosperity bonus of customers and the industry.   The scale of low-voltage appliances is in the hundreds of billions, and there is huge room for domestic substitution in the high-end sector.The low-voltage electrical appliance industry serves various fields of electric power in depth, and can be divided into three major market segments of S1 / S2 / S3. In 2018, the industry scale was about US $ 86 billion, and the mid-to-high-end S1 / S2 market size was about US $ 40 billion.The low-voltage electrical appliance market demand is highly correlated with the highest growth rate of power consumption. It is expected that the low-voltage electrical appliance industry is expected to maintain a compound growth rate of 6% -8% in the future and develop into the 100 billion market.The mid-to-high-end market is basically involved by overseas brands. Combining downstream prosperity and customer demand preferences, it is optimistic that combined with technological advantages, mid-to-high-end direct-selling brands with customer advantages take the lead.   Many downstream boom cycles are coming, and the company has abundant growth momentum.The completed land area is expected to recover 6% -6.Positive growth rate of 5%, and considering the industry average of the indicators for the completion of head real estate companies, it is expected to generate nearly $ 20 billion in procurement demand, and the company’s market share is expected to increase from 5% to 8%; overseas demand in the post-parity era of photovoltaics is fastThe release is expected to maintain a compound growth rate of 18%. The tide of wind power installation is expected to promote the industry’s growth rate to exceed 30% in the next two years. The company and Huawei jointly developed a 1U miniature circuit breaker to directly hit the space pain points of 5G base stations.The company seeks to enjoy Huawei’s 5G construction bonus in combination with its domestic supplier status.   Risk factors: intensified market competition, less-than-expected customer development, less than expected 5G commercial use, and losses caused by counterfeit brands.   Investment suggestion: As a high-quality domestic standard for high-end and low-voltage electrical appliances, the company integrates technology research and development, replaces its service network, constrains downstream high-quality customers in depth, and develops thinly and conducively to make full use of the high prosperity cycle of multiple downstream industries.The company is expected to have a net profit of 2 in 2019-2021.82/3.42/4.10,000 yuan (CAGR 22%), corresponding to the current equity EPS is 0.36/0.44/0.51 yuan / share, PE is 20x / 16x / 14x.Give the company 25x PE in 2019, corresponding to a target price of 8.97 yuan / share, the first coverage given a “buy” rating.