Jiangsu Yulong Steel Pipe:Sound Organic Growth,M&A Raises Market Expectations发布时间：2016-07-24 研究机构：兴业证券
Jiangsu Yulong Steel Pipe Co., Ltd. is a China‐based company principally engaged in themanufacture and distribution of welded steel pipes. The Company primarily provides productsunder the brand name of YULONG, including spiral submerged arc‐welded steel pipes,longitudinal seam submerged arc‐welded steel pipes, square welded steel pipes and longitudinalseam high frequency welded steel pipes. Its products are applied in petroleum and natural gastransportation, chemical industry, coal mines, urban water supply, gas supply, heat supply,residential steel structures, bridges, power transmission and distribution iron towers, large‐scalemechanical equipment and large‐scale construction projects, among others. The Companydistributes its products in domestic and overseas markets.
Main Business to Bottom OutAs a leading expert in R&D, production and sales of welded steel pipe that is mainly used bypetroleum and natural gas companies, Jiangsu Yulong Steel Pipe suffered sharp drop of earningsand revenue due to low oil price and anti‐graft campaign in the field. We expect the trend toreverse with situation changed. And it is striving to expand overseas. The factory in Nigeria willcontribute significant amount of earnings in the future.
New Controlling Shareholder Brings New OpportunitiesZhihe Technology becomes controlling shareholder and Mr. Wang Wenxue becomes actualcontroller of Jiangsu Yulong Steel Pipe. There are bunches of enterprises under Wang Wenxueoperating infrastructure construction, utility investment, culture and entertainment projectmanagement, hi‐tech and pharmaceutical investment and new technology development, whichmay be injected into the Company in the future.
Share prices of China Fortune Land Development (net income went from CNY 7 million in 2009to nearly CNY 5 billion in 2015) and Blackcow Food (share price rose from CNY 9.9 to CNY 22.06in a month)all achieved rapid growth after being controlled by Wang Wenxue, demonstrating theperson’s strong ability on capital market.
Earnings Forecast and Investment Recommendations: We made EPS forecast for the Company atCNY 0.19 in 2016, CNY 0.29 in 2017 and CNY 0.38 in 2018, implying 48x/32x/24x PE. The netprofit attributable shareholders is expected to reach CNY 151 million in 2016, CNY 225 million in2017 and CNY 301 million in 2018. Reiterate OUTPERFORM.
Potential Risks: uncertainty in overseas market, slower‐than‐expected progress of petroleum andnatural gas pipeline construction, integration generated worse‐than‐expected results.