Hop Kang Frequency Conversion: In hand order sufficient product structure is good

Description of the event we recently investigated the combination Kang frequency conversion, the main points are as follows: In hand orders sufficient, product structure is good;　　Industry demand is still strong, price decline situation slowed;　　Strengthen the development of EMC, the integration of dedicated machines, and actively develop new production mode;　　Give the Company a "recommended" rating. We expect 2010-2012 EPS is 0.86, 1.49, 1.934 respectively, corresponding to the current share of PE is 58, 34, 26.　　We think we should pay attention to the market competition is too fierce to lead to high frequency inverter products, the price of a sharp decline, and the company's new business expansion of the risk. Event comments First, sufficient order in hand, product structure Good company is currently in the hand order 500 million, of which the synchronous hoist 150 million, a total of 15 inverter, 2010 delivery of 4 synchronous elevator will be the focus of this year to confirm revenue. 2010 years ago three quarter completed 746 high-voltage inverter sales, is expected to be more than 1000 units throughout the year. At present, the production base has been put into operation, monthly production capacity of 140 units, Wuhan manufacturing base will be launched at the end of 2011, the design of the difference can be 600 units/year.　　We anticipate the company's frequency converter business 2011 years to complete the income of about 600 million. According to the 2010 performance forecast, the net profit increase is higher than the increase in operating income, we think this is mainly due to the 2010, the majority of the products recognized for 2009 orders, by the fall in 2010, the impact of the decline in the overall gross profit margin of 38% or so.　　In addition, cost controls have led to slower growth in corporate costs than revenue. Second, the industry demand is still strong, the price decline is slowing down with the introduction of national environmental protection tax, as well as various energy conservation and environmental protection subsidies in place, enterprises for economic benefits of energy-saving equipment demand in the rapid growth, the average frequency of energy-saving 30%, customers can only rely on the province's electricity　　We believe that the demand of high voltage inverter will remain 20~30% in the next 3 years. After 2009 years, 2010 inverter continued to fall, the 2010 at the end of the converter price of 600 yuan kw, compared to the end of 2009 800 yuan kw level fell 25%. We expect the current high voltage inverter industry profitability has been squeezed, price competition will be a certain relief. We expect that by the end of 2011, the general high pressure price of about 500 yuan kw, the downward trend slowed.　　The current asynchronous control product price is about twice times the general frequency converter, the synchronous control product price is about 2010 Years 5 times times. Third, to strengthen the development of EMC, the integration of dedicated machines, and actively develop new production mode at present, the company is actively expanding new models, such as with the country's South self cooperation, that is, for the future implementation of the company's EMC contract lay the foundation. This year the company focused on EMC.　　Through EMC sales, can increase the price of high voltage inverter, in addition, can drive the load of sales, can increase the amount of the contract.To further broaden the production line, the company is working with customers to develop the inverter and load integration of the machine.　　If the business model goes through, Kang will become the standard-makers and open up new markets.　　The company is currently in the hands of abundant funds, is expected to continue the acquisition of explosion-proof inverter enterprise model, continue through mergers and acquisitions to broaden the company's target market. The Forth, we give the hop Kang frequency conversion "Recommend" rating we expect 2010-2012 EPS is 0.86, 1.49, 1.934, respectively, corresponding to the current stock price of PE 58, 34, 26. We think we should pay attention to the market competition is too fierce to lead to high frequency inverter products, the price of a sharp decline, and the company's new business expansion of the risk.