What happened: the company released a forecast of its semi-annual report for 2018, and estimated that the net profit of returning home in the first half of 2018 was 17699-221.23 million yuan, an increase of 20% and 50% over the same period last year. Of this total, the net profit of Q2 was 12567-169.91 million yuan, an increase of 64%, 122% and 145%, respectively, compared with the same period last year. It is estimated that the impact of non-recurring gains and losses on net profit in the first half of 2018 is about 53.45 million yuan.
Q1 is affected by exchange gains and losses and seasonal factors, and Q2 is significantly better than the previous month. The company's Q1 homing net profit was 51.32 million yuan, down 28% from the same period last year. On the one hand, due to exchange rate fluctuations, the US dollar / RMB exchange rate fell unilaterally from 6.6 yuan to 6.3 yuan, and the company's financial expenses increased significantly from 3.45 million yuan to 18.56 million yuan. On the other hand, due to the seasonal effect of the company's business, some of the company's business orders were relatively dull in the first quarter. In the second quarter, on the one hand, the exchange rate of the US dollar against RMB rose from 6.3 to 6.4, on the other hand, the company's business improved month-on-month. In addition, on May 11, the company announced the sale of 100% stake in Parkway Technology BVI with a transaction value of HK $54.78 million, which is expected to generate a profit of 54.7575 million yuan (equivalent to 44.24 million yuan at the exchange rate of 1: 0.8079 on April 30, 2018), significantly thickening the company's performance.
The business of light conveyor belt is developing rapidly. The company is the leading enterprise in the domestic light conveyor belt business, with revenue of 619 million in 2017, an increase of 30% over the same period last year, and a decline in gross profit margin due to the rise in the price of raw materials. In December 2016, the company acquired VVanderwell of the Netherlands, which took the first step in the international strategic layout. The light conveyor belt business is expected to maintain a good growth trend in the future.
Yingdong Molding focuses on the automobile industry. The subsidiary Yingdong Molding focuses on the automobile industry, and its main customers are FAW Toyota, Shanghai Volkswagen, Shanghai GM, Hyundai, Changan Ford Mazda, Tesla, Inc., Mercedes-Benz, BMW, FAW-Volkswagen, SAIC, BAIC, Jianghuai Automobile and other home appliance enterprises, such as Sony Group Corp, LG, Haier and other household appliance enterprises. Among them, Yingdong Molding signed a cooperation contract with Tesla, Inc. in 2015 and entered the supply chain of Tesla, Inc. to develop, supply products and provide supporting services, which is expected to accompany Tesla production on the one hand and gradually expand the supply category on the other. In September 2017, the company announced the acquisition of 68.77% stake in Huayisheng, which is qualified as a first-class supplier of FAW-Volkswagen and BAIC, and is expected to expand rapidly with the help of the company's marketing network.
Weifeng International focuses on the toy and consumer electronics industries. In October 2016, the company acquired Weifeng International. Weifeng International's main customers include LEGO, Cal-Comp and other well-known enterprises, and actively open up other customers in the consumer electronics industry, which is expected to grow rapidly in the future. Weifeng International's performance commitments for 16, 17 and 18 years are HK $16121, HK $17709 and HK $195.41 million respectively, and HK $18396 and HK $183.12 million are completed in 16 and 17 years, respectively.
Give a "buy" investment rating. The company has formed a troika dominated by light conveyor belt, Yingdong Molding and Weifeng International, and its performance is expected to continue to develop. It is predicted that the net profit of the company from 2018 to 2020 is 400 million yuan, 441 million yuan and 534 million yuan respectively, and the EPS is 0.88,0.97 yuan and 1.18 yuan respectively, and the corresponding PE is 12 times, 11 times and 9 times respectively. Give a "buy" rating.
Risk Tip: the risk that product expansion is lower than expected.