The company released its 2018 mid-term report. During the reporting period, the company achieved revenue of 505 million yuan and net profit of 39.31 million yuan, down 5.05% and 37.36% respectively from the same period last year, in line with expectations.
Main points of investment:
Household membrane treatment market competition is fierce revenue pressure, investment losses drag on the current performance. During the reporting period, the industrial film benefit policy tended to strictly stimulate demand, but the competition for household membrane was fierce, and the overall film sales were under pressure. the company's membrane business (revenue 292 million yuan, accounting for 57.91%) fell 10.16% compared with the same period last year, and the maintenance cost of Shawen's new production line was reduced by 11.14 million yuan. Net profit was 71.43 million, down 5.91% from the same period last year, which was lower than revenue. The brown mattress business (36.91 per cent of revenue 186 million) grew 3.05 per cent year-on-year and was generally stable, but government subsidies declined and net profit fell 4.69 per cent in 16.67 million. The company's holding of Haitong was affected by stock price fluctuations, the change in fair value recognized a loss of 8.43 million yuan, and the disposal of financial assets recognized a loss of 2.18 million yuan on investment. The downstream sales of the company's water purifier business is still in Xu Li, with a loss of 1.03 million yuan during the reporting period, and the overall net profit of the company is 39.31 million yuan.
Shawen RO film new base phase II plant construction has been completed, looking forward to the landing of new production capacity. The company's RO membrane production capacity is about 8 million square meters in 2015. at the end of 2015, Shawen base has built two new membrane production lines, RO membrane 6 million square meters, ultrafiltration membrane 3 million square meters, the first phase has reached full production. Membrane technology is the main direction of water treatment, the current domestic nanofiltration membrane and plate ultrafiltration membrane are still mainly imported, the company expects to increase sales by virtue of cost advantage in the future, the second phase will build a new nanofiltration membrane 4.8 million square meters, plate ultrafiltration membrane 1 million square meters production line, the construction period of two years, the plant is basically completed, equipment installation is expected to reach production in 2020, will be further improved. The battery diaphragm pilot production line runs well, achieves stable production, and is actively promoting market development.
Win the bid EMC order to form a multi-faceted service model of "equipment sales + engineering + operation". Based on the upstream membrane material, the company joined the engineering company in 2017 to cut into the downstream market. In August 2018, the company won the bid for the first 50000 tons / day reclaimed water reuse project EMC contract energy management, with a total investment of 220 million, construction period of 330days, operation period of 10 years, the company fosters new economic growth points. Sign the investment consultant agreement and look forward to speeding up the pace of extension. The company signed the Financial consultant Cooperation Agreement with Yuhua on March 30, 2017, stipulating that it will provide the company with no less than 10 target companies that meet the relevant requirements for environmentally friendly water treatment every year, among which there are not less than 4 target companies with revenue of more than 500 million yuan. With high-end technology as the core, the company is expected to stack new profit growth points in the future, which is worth looking forward to.
Investment rating and valuation: combined with the China report, we slightly lowered the company's 18-20-year return net profit to 1.15,1.4 and 165 million yuan respectively (originally 1.4,161 million and 196 million yuan), and the current stock price corresponds to 22 times the 18-year PE. Maintain the "overweight" rating and look forward to the landing of the company's extension expansion.
