Date:2013-12-03

    Domestic rail connector enterprises. Our products mainly cover railway passenger cars , locomotives , transit vehicles and EMU four segments connector areas , and gradually , the emerging field of military and communications connectors extend to new energy ( electric vehicles and wind power ) . In 2010, rail connector 19 percent market share , the country ranked first . Rail transport is still rapid development. Chinese connector market size in 2016 is expected to reach $ 17.4 billion from 2011 to 2016 is expected to reach 10.8% CAGR ; among higher rail connector ,2006- 2013 growth is expected to reach 24.7% CAGR of rail transportation "Twelve . five " steadily 2011-2015 passenger locomotives will drive connector market of around 1.7 billion . Urban rail and motor car is the core driving force. Expected 2011-2015 planning new urban rail 2435 km , driven by urban rail connector market of about 15 million. EMU is also expected to tender again after 7-23 mass start event , according to the "Twelfth Five Year Plan" estimated 2012-2015 new EMU connector market will reach 3.7 billion yuan . Competition stable EMU connector largest import substitution space. In 2010 more than 38 percent of China's rail transportation connector still purchase from foreign companies , including EMU connector foreign accounting for up to 65.9% due to rail connector technology barriers, certification requires at least 2-3 years , industry competition more stable. In EMU countries gradually realize localization rate of 70% technical objectives , the rapid accumulation of domestic enterprises, technology , cost and service advantages significant import substitution path clear , the future is expected to benefit fully . Concentric diversification drive the company's growth . The company is currently in railway locomotives, railway coaches, EMUs and urban rail connector market share of 22% , respectively , 28%, 32% and 7 %, which is funded enterprises in CRH216 core EMU connector sole supplier . With the rapid growth and future urban rail motor car to pick up the tender , the company expects will significantly enhance future profitability . Meanwhile, the company is still new energy ( electric cars and wind turbines ) , military and communications connector area active layout , the future is expected to achieve " wheeled" pattern. Risk factors. EMU and urban rail construction is lower than expected risk ; gross margin decreased risk. Earnings forecasts , valuation and investment rating. We forecast EPS were 0.88/1.34/1.73 2012-2014 (2011 0.94 yuan ) . Higher rail transportation company engaged connector barriers, while benefiting from the EMU and urban rail construction tender warmer sustained high economic , we expect 2013 results and the upward inflection point greater flexibility . Reference year valuation levels, we give the company 25 times 2013 PE valuation , the corresponding target price 33.5 yuan , initiate coverage with a "buy " rating.