I. Overview of events
On the evening of August 21, the company released its semi-annual report, which showed that the operating income was 550 million yuan, down 14.46% from the same period last year. The net profit belonging to the shareholders of the parent company was 27.11 million yuan, up 104% from the same period last year, while the non-net profit was 4.37 million yuan, up 31% from the same period last year.
II. Analysis and judgment
Income decline narrowed and profitability improved, gross profit margin reached an all-time high
The decline in revenue has narrowed and the profitability of assets has improved. Revenue in the second quarter was 438 million yuan, narrowing to 4 per cent year-on-year (down 38 per cent in the first quarter). Gross sales margin in the first half hit a record high of 18.80 per cent, up 3 pct from the same period last year, 4.91 per cent higher than the first quarter, and 2.8 pct higher than the same period last year, returning to the 2011-2015 average.
Benefit from environmental protection to promote "public transfer railway", the tender for trucks and locomotives in the next three years exceeded expectations.
Benefit from environmental protection to drive the "Public transfer Railway" project. According to the Railway Federation's "2018-2020 freight incremental action plan", it is clear that the national railway freight volume will reach 4.79 billion tons by 2020, an increase of 30% over 2017. Corresponding to the tender number of trucks in the next three years, the number of trucks will be 4,7.8 and 98000 respectively. Calculated according to the unit price of trucks of 400000 yuan, the purchase volume of trucks in the next three years will be 160,312 and 39.2 billion yuan respectively, with growth rates of-20%, 95% and 25%, respectively. CRRC Corporation has a truck production capacity of about 80,000 vehicles, and is reducing truck production capacity, which will give other competitors more room for competition. assuming that according to the company's market share of 5%, 7% and 9%, the corresponding vehicle income is 8, 21 and 3.5 billion yuan, respectively. assuming that the net profit margin of 5% is calculated, the company's net profit will be increased by 0.4,1.05 and 175 million yuan, respectively.
The railway benefits most from the expansion of domestic demand through infrastructure construction, and the prosperity of the railway equipment industry is expected to hit bottom and pick up.
Infrastructure investment has become an important starting point for stabilizing fixed assets and then stabilizing GDP. The total amount and growth rate of highway investment in infrastructure investment reached a historical peak in 2017, and there is not much room for policy operation. Railway has become one of the most important areas to stimulate infrastructure investment, and there is enough space for policy operation. The policy level will continue to exceed expectations. According to the World Rail Transit Information Network, railway fixed assets will return to more than 800 billion this year, and vehicle investment is expected to reach 120 billion yuan, which is expected to increase by 50 percent from the beginning of the year. After nearly three years of capacity loss and deleveraging, the railway equipment sector is expected to usher in a rebound in the economy. As one of the targets with greater flexibility and performance certainty in this round of recovery, the company will benefit deeply.
Third, profit forecast and investment suggestions
It is estimated that from 2018 to 2020, the company's net profit will be RMB 0.67 million, RMB 1.46 billion, respectively, and the corresponding EPS will be RMB 0.05, 0.12, 0.17 yuan, respectively, and the corresponding PE will be times that of 86-39-28, and will be given a "cautious recommendation" rating.
IV. Risk hints
The bidding for trucks is not as expected; the investment in railways is not as expected.