Jingwei Textile Machinery: Leveraging The Trust To Open Up A New World &Nbsp; The Valuation Advantage Is Clearly Recommended.

Main points of report

The company's machinery industry has resumed, and its long-term focus is diversified investment.

The rapid development of the trust industry, the company's holdings of the fusion trust is amazing.

The company expects earnings per share in 2010, 2011 and 2012 to be 0.32 yuan, 0.56 yuan and 1.02 yuan respectively, and the valuation advantage is obvious at present, giving the "recommended" rating.

The biggest risk comes from the risk of loss of related trust products caused by the uncertainty of real estate policies and industries.

Turning losses into main parts of textile machinery industry

We believe that the main business and gross profit margin of the company can gradually rise and reverse the loss of the company's main business. But from the perspective of the future income structure of the company, the contribution rate of the textile business to net profit is limited.

Diversify strategy

Although the gross profit margin and sales revenue of the company's main products have improved since 2010, the textile and textile machinery industry has been affected by macroeconomic fluctuations. In order to enhance the development potential, the company has started a diversified development path: on the one hand, it has carried out real estate business through its subsidiary company, Beijing Bo Hong real estate development Co., Ltd.; on the other hand, the company invested 1 billion 200 million yuan to buy 36% equity interest of Zhongrong trust held by Zhongzhi group, so as to develop trust business and related leasing business related to textile machinery.

In August 17th, the company completed the record of the industrial and commercial change of the stake in the Sino trust trust company. The financial trust report was formally incorporated into the company's consolidated financial statements. From the three quarterly report of the company, it was seen that the contribution of the fusion trust to the company's performance would be far more than 72% of the sky textile machine, accounting for more than 74%.

China Financial Trust dark horse protruding

In 2007, the CBRC promulgated the "new two rules", which marked the new era of China's trust industry.

The "12th Five-Year plan" put forward the goal of "raising residents' property income", and the focus of national economic work will start from "national wealth" to "rich people".

We believe that in the next five years, the total scale of China's non bank credit cooperative trust will exceed 10000 billion yuan.

Since the issuance of financial licenses in 2007, China Trust has grown from a regional company to a nationwide business.

In terms of trust income, China Trust has jumped from thirty-second in 2006 to third in 2009, and the proportion of Trust Income in the industry has expanded rapidly from 0.49% in 2006 to 7.58% in 2009.

In terms of the scale of trust assets, the ranking of China Financial Trust rose from twenty-third in 2006 to fourth in 2009, accounting for 1.42% from 1.42% in 2006 to 7.12% in 2009.

In the expansion of asset size and trust product yield, China financial trust has increased its profitability.

In the case of tighter credit cooperation policy and tighter real estate trust policy, the company actively launched securities investment trust, equity investment trust, equity investment trust and portfolio investment trust products. As at the beginning of December, the company's high-risk loan investment trust accounted for 11.94%, which was lower than the average value of 21.7% of the industry, while the company's securities investment trust continued products of 218, accounting for 49.1% of the company's remaining trust products, which was 34.7% higher than that of the industry; the equity investment trust, equity investment trust and portfolio investment trust in the remaining period accounted for 13.96%, 14.86% and 6.53%, respectively, which were higher than the average value of the industry.

At present, there are no single capital trust products in trust trust, and two real estate investment trusts.

Earnings forecasts and ratings

China Trust has been outstanding in the recovery of trust industry in recent two years.

We believe that although the growth of trust companies is too fast to face some problems such as management assets risk and capital shortage, this will not change the trend of trust industry. The demand for wealth management is a long-term driving force. Real estate trust will not be abandoned because of short-term halting, and the risk is also within the scope of affordability. In-depth analysis of the management assets structure of China Trust Trust is actually better than the average level of the industry.

Based on the above analysis, we expect earnings per share in 2010, 2011 and 2012 to be 0.32 yuan, 0.56 yuan and 1.02 yuan respectively.