20160601-光大证券-威胜集团-03393.HK-Bottom_Fishing_15页_147kb
报告摘要
Wasion Group (3393 HK) Summary
Core Content
Wasion Group is a leading supplier of smart measuring, smart power distribution and utilization, and energy saving management solutions in China. It is a market leader with over 20% market share in domestic high-end measuring products and has a strong presence in the energy sector, offering a full range of products and services for electricity, water, gas, and heat. The company is also involved in advanced distribution operations (ADO), which includes smart distribution devices, solutions, and efficient energy-saving services.
Main Points
Market Position
- Market Leader: Occupies over 20% of the domestic high-end measuring products market.
- Diverse Products: Offers smart meters, data collection terminals, communication systems, and energy management services.
- Major Customers: Includes State Grid, China Southern Power Grid, and other non-grid customers such as China Guodian, CNPC, and overseas companies like Siemens and Ericsson.
Business Segments
- Advanced Metering Infrastructure (AMI): Involves smart meters, data collection terminals, and communication systems.
- Smart Meter (SM): Focuses on smart electric, water, gas, and heat meters.
- Advanced Distribution Operations (ADO): Includes smart distribution devices and solutions, contributing to significant growth.
Growth Drivers
- Smart Grid Replacement Demand: Expected to begin in late 2016 or 2017 due to the 6-7 year lifespan of smart meters and technological advancements.
- Smart Water Metering: With the implementation of water escalating pricing systems across China, demand for smart water meters is set to increase.
- ADO Business Growth: ADO services have shown over 35% YoY growth in the past two years and are expected to continue growing due to rising energy efficiency concerns.
Key Financial Information
| Metric | 2014 | 2015 | 2016E | 2017E | 2018E |
|---|---|---|---|---|---|
| Revenue (Rmb m) | 2,812 | 2,969 | 3,200 | 3,582 | 3,978 |
| Revenue Growth (%) | 16.6 | 5.6 | 7.8 | 11.9 | 11.1 |
| Net Profit (Rmb m) | 482 | 424 | 394 | 449 | 511 |
| Net Profit Growth (%) | 20.3 | (12.2) | (7.1) | 14.1 | 13.8 |
| EPS (Rmb) | 0.51 | 0.42 | 0.39 | 0.44 | 0.50 |
| EPS Growth (%) | 18.6 | (17.6) | (7.1) | 12.1 | 13.8 |
| PER (x) | 6.6 | 8.0 | 8.6 | 7.7 | 6.7 |
| P/B (x) | 1.0 | 0.8 | 0.8 | 0.8 | 0.7 |
| EV/EBITDA (x) | 5.5 | 4.9 | 5.4 | 4.7 | 4.0 |
| DPS (HK$) | 0.24 | 0.24 | 0.21 | 0.24 | 0.27 |
| Yield (%) | 6.0 | 6.0 | 5.2 | 5.9 | 6.7 |
Investment Highlights
- Target Price: HK$4.70, based on a 20% discount to its 7-year average PE ratio, equivalent to 10x 2016E PE.
- Valuation: The current valuation is considered attractive due to the anticipated resumption of earnings growth in 2017.
- Performance: The stock has shown a 16.6% upside potential from the current price of HK$4.03.
Key Risks
- High Receivable Days: Over eight months in the past two years, which could worsen if the PRC economy slows down.
- Customer Concentration: Over 65% of revenue comes from power grid customers, making the company vulnerable to any loss of these key clients.
- Intense Competition: The smart meter market is highly competitive, with potential for irrational pricing.
- Order Postponement: Uncertainties in the PRC economy may lead to delays or reductions in investment in energy-saving projects, affecting profitability.
Financial Summary
| Metric | 2014 | 2015 | 2016E | 2017E | 2018E |
|---|---|---|---|---|---|
| Revenue Growth (%) | 16.6 | 5.6 | 7.8 | 11.9 | 11.1 |
| EBITDA Growth (%) | 21.3 | (5.3) | (6.4) | 13.5 | 13.6 |
| EBIT Growth (%) | 29.9 | (6.7) | (9.7) | 14.9 | 14.5 |
| Net Profit Growth (%) | 20.3 | (12.2) | (7.1) | 14.1 | 13.8 |
Conclusion
- Investment Recommendation: Initiate Buy, anticipating earnings growth in 2017 and a favorable valuation.
- Growth Expectations: The company is expected to grow at a CAGR of 10.2% from 2015 to 2018.
- Margin Outlook: Gross margin is expected to improve gradually from 2017 onwards due to higher-margin ADO products.
- Net Profit Outlook: Net profit is projected to resume growth in 2017 and 2018 with a CAGR of 6.5%.
Additional Information
- Shareholder Structure: Ji Wei holds 51% of shares, while free float is 49%.
- Market Cap: HK$1,967 million (as of the latest data).
- Turnover: 12M daily turnover at HK$30.8 million.
- Volatility: 58.1% over 12M.
- PEG (FY15-17E): 3.9x.
Valuation Comparison
| Stock | P/E (x) | P/B (x) |
|---|---|---|
| Wasion Group | 8.0 | 0.9 |
| Boer Power Holdings | 4.0 | 1.0 |
| Shenzhen Clou Electronics-A | 57.2 | 4.8 |
| Qingdao Tgood Electric-A | 131.2 | 8.3 |
| Average | 44.3 | 3.2 |
| Median | 24.7 | 2.2 |
Summary
Wasion Group is a key player in the Chinese smart meter and energy management market, with a strong market share and a diversified customer base. Despite weak results in 2015 due to postponed orders and a shift in sales mix, the company is expected to benefit from the smart grid replacement cycle and growing demand for smart water and gas metering. The investment recommendation is to Initiate Buy, based on its current undervaluation and expected growth in 2017. Key risks include high receivable days, reliance on major customers, intense competition, and potential order postponements.
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