Eddy Precision (603638): Hydraulic breaker faucet pump valve and motor import substitution try to accelerate

Eddy Precision (603638): Hydraulic breaker faucet pump valve and motor import substitution try to accelerate
The company is a domestic leader in breakers and hydraulic parts. At present, the company’s market share of excavator breakers is in the leading position in the industry.As the demand for excavators and the rate of hammer allocation continue to increase, the company’s breaker business is also expected to grow steadily. As for the hydraulic parts of the excavator, the company’s hydraulic products basically cover the entire excavator (pump valve + motor) and have split the internal leading OEM plant. With the constant volume of hydraulic products / production lines, the import substitution of hydraulic parts attempts to continue to accelerate.In the long run, due to the company’s high-end product positioning and various types of hydraulic product technology, the company is expected to expand its products horizontally and vertically and rank among the large-scale hydraulic system solution providers. Core point of view Infrastructure recovery, excavator demand remains high.Because the company’s products are mainly used in excavators and other construction machinery.We believe that after the state ‘s continuous release of favorable and supportive policies in the infrastructure sector, infrastructure 南宁桑拿 investment is expected to bottom out; and this round of excavators resumes to alternately and steadily, and the industry has entered a steady growth stage (it is expected to reach about 10-20% in 19 years)). Broken hammer faucet, with improved hammer rate + excellent customer resources help the market share lead the industry.The company is the only listed company with construction machinery accessories. It has several years of experience in research and development and sales of breakers. Its customers cover domestic and foreign first-tier brands such as Sany, CAT, etc .; its market share (especially sledgehammers) has taken the lead in the industry.The control of the crushing method (explosives, etc.) is expected to continue to improve the hammer rate of the excavator.At the same time, through the rise of domestic excavators and the 杭州桑拿网 shrinking of Japanese and Korean strains, the domestic market share of domestic breakers, represented by Eddie, has reached the maximum value advantage and has continued to increase; the localization of hydraulic components has accelerated, and the product has expanded horizontally and vertically.Large hydraulic solution provider.At present, the company’s pump valves and motors have been assembled in batches in first-line OEMs. Zonda’s pump valve products have made breakthroughs and expanded in batches.Due to the space transmission of the front-loading market of the hydraulic system of the excavator (which has reached 12 billion in 2018), the company’s future penetration rate will help continue to increase.Due to the wide space of hydraulic components / systems and the same technology, it is expected to expand / sink the product horizontally, enter more non-excavator fields and expand the growth space again. Financial forecast and investment advice: We forecast the company’s earnings for 2019-2021 to be 1.31, 1.67, 1.74 yuan, we are optimistic about the healthy growth of construction machinery, the OEM’s urgent need for the localization of core components, and the company’s advantages in terms of technology and user resources.Based on estimates from comparable companies, we believe that the current company’s reasonable estimate is 25 times P / E in 2019, with a corresponding target price of 32.75 yuan, the first time to give an overweight rating. Risk reminder: macroeconomic downside risks, the excavator renewal demand is less than expected, overseas business development is less than expected, the company’s product penetration rate is less than expected, raw materials and exchange risks.