South Pump Industry: Opening a New Chapter in Pump Industry Development

Summary of contents: The Southern Pump Group expects that the net profit attributable to shareholders of listed companies in 2011 will be 87.60 million yuan -101 million yuan, an increase of 30% - 50% over the same period of the previous year. Once again, the company added 20 million yuan to Changhe Pumps, fully demonstrating the company's resolute attitude in actively deploying medium and high-end large industrial pumps. In addition, the company will use Changhe Pump as a platform to leverage its customer resources to create a positive company for the company to open up the central market, which will benefit the company's future long-term development. Changhe Pumps, under the strong support of the Southern Pump Group's abundant funds and technology, is expected to expect future development, or to a certain extent, to increase the 2012 performance of the Southern Pump.

1. The market for the pump industry is vast, and substitution effects in both areas are gradually emerging.

From the pump market, stainless steel pump applications are mainly focused on water purification, building water supply, air conditioning water circulation, industrial cleaning, medium and low pressure boiler feed water, and deep well water extraction in the pharmaceutical and food industries. The market is vast. In 2009, the sales volume of foreign stainless steel stamping and welding centrifugal pumps was between 18 billion and 20 billion yuan. The sales in the domestic market was about 3 billion yuan. In the first 11 months of 2011, the industry growth rate was 20%.

Intra-structure substitution and international substitution. The replacement of stainless steel pumps with cast iron pumps is an inevitable trend. The advantages of stainless steel pumps over cast iron pumps are: high efficiency and energy saving (10% energy saving), cleanliness (corrosion resistance), and material saving. In addition to the demand for stainless steel pumps in places where the water quality requirements such as farmland water conservancy are not high, as the demand for clean water continues to escalate, stainless steel pumps will replace the cast iron pumps. International substitution refers to the replacement of the company’s products with foreign brands of stainless steel pumps globally. Compared with foreign brands in the industry, the advantages of the company are: 1) high cost performance. The price is only 40%-50% of similar products of foreign brands, and the quality has gradually been recognized by high-end commercial sites such as Shanghai Global Finance Center; 2) The after-sales response is rapid.

At present, the company has more than 60 service centers spread across the country and more than 500 sales staff, which is unmatched by foreign brands relying mainly on agent sales; 3) Overseas sales are temporarily dependent on agents, and sales in 2011 account for approximately The sales revenue is about 25%, and this proportion will increase in the future.

2. The company is a leading company in the industry and strong industry consolidation is expected.

In the industry, Danish Grundfos and other foreign companies have a market share of about 50%; the company accounts for about 12% of the market, and other domestic companies account for 38% of the total. There are currently about 30 companies that produce stainless steel stamping and welding centrifugal pumps in China. The company is currently the largest professional manufacturer of stainless steel stamping and welding centrifugal pumps in the field of production and sales.

In recent years, the global pump industry is accelerating the pace of mergers and acquisitions, the total number of pump manufacturers continues to decrease, and the total output keeps rising. The competition and monopoly of transnational pump companies have further intensified. According to incomplete statistics, there have been 80 major mergers and acquisitions in the foreign pump industry since 2000-2006. The sales of the world's top ten pump manufacturers accounted for 50% of the total world pump market. We believe that as the leading enterprises in the industry begin to accelerate the development of listing financing in recent years, regional leading companies in the domestic market are expected to rapidly grow into national leaders, and market concentration is expected to increase.

3. Expand the production capacity of stainless steel pumps and expand the upstream and downstream industrial chains.

The company produced or sold about 300,000 units in 2010. We expect that this year's production and sales volume will not change much, but revenue growth will exceed 30%, mainly due to the adjustment of the pump product structure, resulting in an increase in the proportion of large-sized high-priced pumps. With the technological transformation and the adjustment of the factory layout, 200,000 units of production capacity will be raised and invested, and production will start in the first half of next year. The 300,000 new production capacity projects funded by over-raised funds will start construction this year, and will be put into production in the second half of the year. The benefits will be seen in 14 years. Huzhou Nanfeng foundry's 6,000 tons of casting capacity in addition to meet the company's pump product needs, a small part of the surrounding external processing, future capacity will be fully protected.

The company actively expands the industrial chain: In terms of casting parts and components, the company set up Huzhou Nanfeng castings to meet the casting demand; in the existing product line, the company will improve the development of new products and new models, and continue to promote the negative pressure water supply Equipment, desalination pump market promotion and R&D; in terms of new products, the company acquired Hunan Changhe Pumps, Changhe has a certain amount of technology accumulation, sales income of 1-2000 million yuan, is currently making equipment updates, 2012 will be There are major improvements for mining, water conservancy and hydropower, agriculture, etc. At the same time, the company and Japan Tsurumi Corporation invested in the establishment of the Southern Horo Group. In addition to electrical equipment, the future wants to rely on Tsurumi's dominant position in the field of sewage pumps. Expand the business to the field of sewage pumps.

1) The industry is bland. The pump industry belongs to the general equipment manufacturing industry. The annual growth rate is maintained at about 20%, and there is little possibility of explosive growth.

2) The company is a leading company in stainless steel stamping and welding pumps, an important fine molecular industry in the pump field. It grew from a revenue of 4.8 million in 2000 to nearly 850 million in 2011, with an average growth rate of 60%. In the future, with the improvement of living standards, all pumping equipment related to clean water will have the expectation of using stainless steel pumps, and the company's growth will be better.

3) The foreign market has a vast space. The company gradually approaches the foreign brands in terms of quality, and there is still a great advantage in terms of prices. There is a lot of room for export imagination in the future.