Company Profile

Since its inception in 2006, Amsky has specialized in the sales and service of prepress equipment andprepress materials, and has set foot in the R&D of industrialized print technology and developed laserprint head of 32 channels, 48 channels, 64 channels, and 128 channels in the succession. By adoptingthem on CTP successfully, Amsky launched the first generation of Alpha 900 series and produced themin small-scale. （Source: company’s official website）Market penetration of offset CTP systems continues to improve. The trend of replacing importedflexible CTP systems with domestic ones has accelerated. The company is the domestic CTP systemmarket leader; its core product offset CTP system accounts for 20% of domestic market share and 5% ofinternational market share. Conservative estimates show the potential penetration of domestic offsetCTP system is still less than 40%, much lower than the average of 60%-81% in Europe and the UnitedStates. The eco-friendly flexible CTP industry is growing rapidly, with foreign brands accounting for 90%of the market share. The company is the first to introduce onto the market the new flexible CTP system,whose market share continues to expand.

Between 2016 and 2020, the digital printing industry is expected to register a CAGR growth of over30%. The industrial ink-jet printing market has great potential. Market penetration of domestic digitalprinting is only 1.5%, far below the global level of 15%. In 2016-2020, the digital printing industry isexpected to register a CAGR growth of over 30%. The industrial ink-jet printing technology boastsnumerous strengths including high precision, and flexibility; it’s widely used on from nano-scaled itemsto billboards. The technology is expected to, in the future, be used in more areas including textileprinting and dyeing, glass jewelry, electronics, biotechnology, and 3D printing. There is broad roomfor the import substitution trend to advance.

Earnings Forecast and Company Valuation: The company will start manufacturing ink-jet print headson small scale in the second half of 2017, in a bid to break the foreign monopoly and advance importsubstitution. The company is expected to see remarkable earnings growth in 2018. We estimate thecompany’s net profit at CNY 540 million, in 2017, CNY 110 million in 2018 and CNY 182 million in 2019.

The corresponding EPS was CNY 0.67 in 2017, CNY 1.37 in 2018, and CNY 2.28 in 2019, implying 82x17E PE, 40x 18E PE, and 24x 19E PE. Reiterate BUY.

Potential Risks: Slower-than-expected new product marketing