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Zhengzhou Mining Machinery: hydraulic supports industry leading operating perf
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Zhengzhou Mining Machinery is the hydraulic support industry leader, focused on the coal mining industry downstream, leading products and rapid growth rate. Zheng hydraulic support coal-based products, is the industry's leading enterprises (about 30% of the share of industry revenue, corresponding to a 60% share of industry profits), lower concentrate d in the coal mining industry, currently the economy is high. We believe that our machinery for coal demand of coal will be slightly faster than the growth of fixed asset investment, is expected to more than 20% average annual growth rate (mainly because of coal mine production safety requirements for promotion, labor costs, higher oil prices and coal is expected to chemical projects to promote growth in demand brought about coal mining, closure of small coal mines to bring the integration of coal enterprises, etc.). The company as a leading enterprise segment, the growth in turn slightly faster than the industry expected the normal growth of its leading products in more than 20%. Endogenous growth and expansion of co-existence of the company denotative larger space for future development. Connotation and extension of the company's future expansion in the hand of the stage. Content development industry, mainly from the increased demand for coal and future demand for the gradual release of updated; Extensive expansion to other coal mainly from the penetration of products and other possible mergers and acquisitions. We believe that the company endogenous growth is more clearly defined; the scraper there has been a breakthrough on; the exception of the environment is not easy to find the ideal result in other acquisitions, the cost may be higher, but their conditions are ripe for acquisition, we believe that the acquisition may follow short-term impact is limited. Next year the company expects revenue growth of 25%, the gross profit margin steadily. Solution with capacity bottlenecks Shun Li Machinery Company and the possibility of the table allows the company to revenue growth next year, products of hydraulic support more than 25% probability of a big event, the still of the products, the company is also roughly the level of revenue growth ; and increase the proportion of high margin products and accessories to further enhance self-sufficiency rate of the consolidated gross profit margin will make the situation was steadily. 32% compound growth rate of the next three years, to give overweight-A rating. We estimate earnings per share the next three years were 1.29,1.67 and 2.09 yuan, more than 32% compound annual growth rate. We believe that a reasonable valuation of the company in 2011 the level of the dynamic price-earnings ratio of 25 times -30 times, and the corresponding price in the range -50 42 yuan per hour, given the investment holdings-A rating. Faster than we expect if the mergers and acquisitions, valuation on this basis will be further increased. The main risk is that the expected rise in steel prices and the acquisition of uncertainty.

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