1H2018 net profit after deducting net income increased by 12.49% year over year. The company announced that 1H2018 achieved revenue of 1,597 million yuan, an increase of 16.4% over the previous year; realized net profit of 216 million yuan, an increase of 46.41% over the previous year; and achieved EPS of 0.26 yuan/share. Among them, during the reporting period, the company generated investment income of 446.1114 million yuan due to the sale of its subsidiary Broadway PrecisionTechnology. After excluding the impact of non-recurring profit and loss, 1H2018 achieved net profit of 160 million yuan, an increase of 12.49% over the previous year. Based on this estimate, in 2Q2018, the company achieved revenue of 91 billion yuan, an increase of 25% over the previous year; net profit of 112 million yuan after deduction, was 112 million yuan, an increase of 53% over the previous year.
The traditional main business, the lightweight conveyor belt business, has maintained steady growth. The company's traditional main business, the light conveyor belt business, is widely used downstream. With the steady development of the domestic economy, industry demand continues to grow. During the reporting period, the company further consolidated and enhanced product competitiveness in this field, which led to a steady increase in the company's orders, and corresponding increases in operating income and net profit. 1H2018's lightweight conveyor belt business achieved revenue of 328 million yuan, an increase of 20.58% over the previous year; net profit from the parent company was 35.33 million yuan, an increase of 18.56% over the previous year.
Yingdong Mold continues to expand its product range, and its automotive molding business has achieved high growth. In recent years, the subsidiary Yingdong Molding has acquired 100% of the shares in Beijing and 68.77% of the shares in Suzhou Huayisheng. On the one hand, it has added a car door handle business and expanded the product range; on the other hand, it has achieved a breakthrough from automotive plastic parts to assembly supply, and has continuously improved the supply qualifications for automotive plastic parts. During the reporting period, the company continued to expand its layout. Yingdong Molding achieved revenue of 717 million yuan, an increase of 25.83% over the previous year; net profit of Qimu was 42.3 million yuan, an increase of 32.51% over the previous year.
With the acquisition of Xinyi Industrial and Yongxie Development, Weifeng International's production capacity was further expanded. During the reporting period, the company acquired 100% of the shares in Xinyi Industrial and Yongxie Development for HK$259 million. Through this merger and acquisition, the company obtained land use rights, plants under construction, machinery and equipment, etc. held by its subsidiaries, further expanding production capacity and laying the foundation for Weifeng International to develop more new customers and achieve continuous and stable performance growth. 1H2018 Weifeng International achieved revenue of 552 million yuan, an increase of 13.66% over the previous year; net profit to parent was 140 million yuan, an increase of 42.65% over the previous year. After deducting 44.61114 million yuan of disposal proceeds from the sale of Parkway Technology, net profit of 98.45 million yuan was realized, an increase of 3% over the previous year.
Profit forecasting and investment ratings. We expect the company's EPS in 2018-2020 to be 0.46, 0.47, and 0.56 yuan/share, respectively. Combined with the valuations of comparable companies, we carefully give 13-15 times PE in 2018 and a corresponding reasonable value range of 5.98-6.9 yuan (corresponding to PS1.51 times to 1.74 times in 2018, 1.58 times to 1.83 times PB in 2018) to maintain superior market ratings.
Risk warning. Automobile sales have declined, new production capacity has been released below expectations, and raw material prices have risen sharply.