Company Profile

Flying Technology Co., Ltd. manufactures and distributes elevator products. The Company produceselevator door systems, elevator cages, elevator control systems, elevator accessories, and otherproducts. Flying Technology also operates technology development, technology transfer, and otherbusinesses. （Source: Bloomberg）

The company is one of the best elevator service provider.

The company is engaged in the development, production and sales of elevator door system, elevatorintegration control system, elevator car and door system supporting parts, forming a diversified elevatorsupporting product system. The company's shareholding structure is stable and management holds thecompany.

The market scale of the downstream elevator industry is huge, policies drive demand growth.

The company's operating income structure is stable, mainly from the elevator door system; Throughindependent research and development core technology, gross margin is at a higher level than that ofthe same industry. Take advantage of the upgrading of the downstream elevator industry and theopportunities of many favorable policies, cooperated with the company's product diversificationstrategy, improved the market share of the company.

The fund raised by the company will invest in elevator door machine system, control system andsupporting parts of the project, R&D center and marketing network.

After the completion of the project, it is expected to achieve the business development goal of the salesrevenue of 700 million yuan in the next three years, expanding the existing capacity and consolidate themarket dominance of the elevator door system; Optimize the product structure, gradually expand themarket share of elevator control system and the supporting parts of elevator car and door system, andeffectively improve the company's core competitiveness and overall strength.

Earnings forecast and investment recommendations: The elevator door system business is greatlyaffected by the downstream demand. With the renovation of elevator and demand expansion due to theurbanization, this sector will have a rapid growth. We estimate this company will contribute CNY77/82/86 million net profit in 2017-2019, EPS at 0.37/0.40/0.42, implying 40.7x/37.9x/36.1x PE. Initialcoverage with Buy.

Potential Risks: 1. The risk of bad debts from accounts receivable; 2. The core business is unitary.