High-end expansion of heat shrinkable materials

The company issued a notice of major business contract announcements: 1) According to the third batch of centralized bidding information of the State Grid in 2012, the company's subsidiaries Changyuan Shenrui, Changyuan Power and Dongguan Gaoneng respectively won the bid for 170 million protection and monitoring equipment and 15.21 million cable accessories. And composite insulators 5.15 million; 2) According to the notice of the winning bid of China Guangdong Nuclear Power Engineering Co., the group company won the bid for 4.19 million yuan for Fangchenggang Nuclear Power Phase I and Yangjiang Nuclear Power Phase I nuclear-grade cable accessories.

Event review

The company's performance growth was stable, with a CAGR of 32% and 43% for total revenue and net profit for 5 years. After business expansion, it has formed a strategic development structure in which the three major businesses of power grid equipment, heat shrinkable materials and circuit protection components are on the same page.

The company's power grid equipment business is the most noteworthy. The revenue has maintained a growth rate of more than 50% in 10 years and 11 years, and exceeded the heat-shrinkable materials for the first time in 11 years, making it the largest proportion of total revenue.

The company is involved in both primary and secondary equipment. Among them, in one equipment, the company mainly produces cable accessories.

In this third round of bidding, the market share of accessories products reached the first, at 26%. Although the company has an advantage in the cable accessories business, considering that the equipment bidding growth rate is not satisfactory in recent years, and the overall value of the accessory equipment is low, we believe that its contribution to the company's performance is limited. What really drives the grid sector is the rapid growth in revenue from secondary equipment.

In recent years, the amount of tender for secondary equipment has increased significantly. Take the protection equipment and monitoring equipment in the national network bidding as an example. The tender for the third batch of protection equipment and monitoring equipment in this round increased by 208% and 273% respectively year-on-year; the total amount of the first three batches of tenders increased by 158% and 148% respectively, which was obvious. In the third round of this round of bidding, the company's market share in the field of protective equipment reached 14%, second only to the Quartet shares [0.81% fund research report] and Nanrui Jibao; in the field of monitoring equipment, the company won the bid for 11 years without equipment. Rapidly expand to a market share of around 10%.

The company's heat shrinkable materials still maintain the country's first market position. However, most of the revenue in this business comes from the field of consumer electronic materials, and the competition is fierce. In order to find new growth points, the company actively explored the high-end market and successfully entered the pipeline anti-corrosion and high-speed rail market. At present, the new breakthrough point is in the automotive heat shrinkable material and nuclear grade cable accessories market, and try to enter the military field. The announcement of the two major nuclear power projects won the bid, indicating that the company's successful expansion in the nuclear-grade cable accessories market has an important role in benchmarking. It is expected that with the restart of nuclear power, the relevant unit bidding will bring more orders. In addition, the successful application of the company's products in nuclear power will also help it enter other high-end materials market.