Gas sensor and gas detection instruments and meters have a promising market

Gas sensor and gas detection instruments and meters have a promising market. With the sustained and stable development of China's economy and the advancement of industrialization, the entire machinery manufacturing and instrumentation manufacturing industry will grow steadily. It is expected that under the premise of the country’s expansion of domestic demand, additional investment of RMB 4 trillion, and the launch of plans to revitalize major industries in the next few years, heavy industries such as metallurgy, chemical industry, gas, and coal deep processing will attach importance to safe production and the demand for equipment on this area will increase rapidly. With the growth, the instrumentation industry as a supporting industry in the above industries will enjoy good opportunities for development.

Cost control and technological advantages make the company an industry leader. The gas sensor used by the company is now professionally developed, designed and produced by Weisheng Electronics, a wholly-owned subsidiary. Weisheng Electronics is a domestic enterprise that can produce four major types of gas sensor products at the same time, and its market share is at the leading position in the country.

The sales method is flexible, and the customer source is stable, continuous and diverse. For the domestic market, the company operates in the form of direct sales and distribution in the product promotion process. After years of development, the company has gradually established a relatively stable customer base. Most of its customers belong to enterprises in the gas, chemical, metallurgy, petroleum, coal chemical, biogas, pharmaceutical, and food industries. The gas sensors exported by the company are mainly direct sales. The customers are foreign manufacturers of gas detection instruments. The products use the publisher’s own trademarks. The company's exports of gas detection instruments and meters mainly use ODM (original design manufacturer), OEM (original equipment manufacturer) approach, customers are mainly foreign dealers, products use the dealer's brand.

Earnings forecast and valuation. We expect Hanwei Electronics' main operating income to be 1.15, 1.44, and 201 million yuan in 2009-2011, respectively, with net profit of 3,900, 5,000, and 67 million yuan respectively. According to the total stock capital of 59 million shares issued after the issuance, the EPS will be 0.66, 0.85 and 1.14 yuan respectively. Taking into account the leading position of the company in the subdivision industry and the further improvement of the profitability of the company after the completion of the fund-raising investment and construction project, we give the company a 30-34x PE interval in 2010, with a corresponding fair value of 25.5-28.9 yuan. . The suggested inquiry range is 22.95-26.1 yuan.

Risk Warning: This market segment is currently fully competitive and companies need to face direct competition from foreign companies. As industry products are upgraded and upgraded quickly and the technical R&D strength is very demanding, the company's development faces the risk of technical development and the loss of technical talents. The company's shareholding structure has a family-owned company's mark and there is a risk that the actual controller will not control it properly. The production of raised investment projects will expand the company's production scale and impose higher requirements on the company's management level. As the company is the first listed company in the electronics and components industry on GEM, investors need to pay attention to investment risks.