Kunming Machine Tool: Order steady recovery strategy for pro-active “cautious recommendation&qu;
2009 annual demand is steadily recovering, but did not reach the high point in 2008. In 2009 the company higher order chain, over a quarter of the second quarter, orders increased by about 33%, third and fourth quarter orders to remain stable, about 3.2 billion, we expect 11-12 billion in orders throughout the year, lower than the 2008 Order peak of about 25-30%.
New orders reflect the changes in distribution path of manufacturing capacity expansion is expected to grow by 2010 about 15% of orders. Kunming Machine Tool Orders in 2009 mainly in the construction machinery industry, energy, equipment manufacturing, railway equipment manufacturing industry, and 2007,2008 of orders mainly in shipping, metallurgy, chemical industry, engineering machinery and other industries. Our statistics of the first three quarters of 2009 Machinery Industry capital expenditures listed companies, transportation equipment, purchase of fixed assets, intangible assets and other long-term assets to pay cash down 12.6%; special equipment increased by only 3% ,2006-2008 average growth rate of 50%; general machinery manufacturing fell 11%, the first three years the average growth rate of 29%; can see that in 2009 expenditure on machinery industry asset growth and income growth does not match. As capital spending slightly lags behind the change in earnings, we expect the machinery industry in 2010 will be a sharp rebound in capital spending, the machine tool industry will benefit.
Import guide Grinder In place to improve productivity and control product quality. Rail grinding machine from Italy, was ordered in 2009 have been delivered and are debugging, the company already has five high precise grinding.
Machine Tool directly affect the machining accuracy precision machine tools, is a key processing operations, and import rail grinder order cycle in 1-2 years, an increase of key equipment will improve the company’s production capacity will help control product accuracy.
Corporate strategy will be conservative turn positive, increase the wealth of product research and development, to take an active pricing strategies. Kunming Machine Tool successfully launched in April a new TK6926 CNC floor milling Boring And delivered, in May the successful launch of the fixed beam gantry milling CNC XK2425, the company will gantry Milling 3-5 years as a breakthrough perfect 3-5m milling machine product line. Kunming Machine Tool Main Products heavy-duty basic price stability, some of the fourth quarter 2008 General machine tools Lower prices than in 2010, the company will adopt a more flexible and effective marketing policies, to strengthen the mainstream distribution channels and actively explore overseas markets and sales of new energy, railway construction and automobile industries, emerging markets.
Company cautiously optimistic about the future, building self-financing stage, “reloading cast base.” The price of the company to 50.72 million yuan to buy the 634 acres of land for the construction of heavy-duty casting, machining and assembly as one of the production base, the overall project to be implemented in phases, the investment will be based on economic changes combined company to make adjustments.
Risk factors: one signed in 2009 a new decline will affect the performance of this year; CNC machine tools Value-added tax incentives expire, operating income will decline.
Maintain “prudent recommendations-A” investment rating. Suppose Floor Type Milling Machine 2010 revenue declined slightly, horizontal milling machine sales rise, gross margins due to product changes in the structure decreased slightly; assuming no other CNC machine tools business subsidies; forecast EPS of Kunming Machine Tool 2009-2011 to 0.6,0.55, 0.64 yuan in 2010 PE of 29 times dynamic, at a reasonable valuation range.