Items:
Wynn (300230) issued a forecast of its results for the third quarter of 2018 on October 9, 2018. It is expected that the company will achieve a return net profit of about 327 million yuan to 393 million yuan in the first three quarters, an increase of 50% and 80% over the same period last year. Among them, Q3 realized a net profit of about 127 million yuan to 155 million yuan in a single quarter, an increase of 80,120% over the same period last year. In this regard, our comments are as follows:
Comments:
Automobile molding business is growing rapidly, and Yingdong molding continues to expand. Yingdong Molding has a stable customer base, many of which are well-known international brands of automobile and household appliances. After the company acquired Yingdong Molding in 2015, Yingdong Molding has greatly increased the production scale and business variety of the subsidiary through the acquisition of 35% equity in Beijing and 68.77% in Suzhou Huayisheng. It has also achieved a breakthrough in automotive plastic parts to assembly technology, and improved supply qualification and brand image. The company's business layout achieved remarkable results in the first three quarters, and Yingdong Molding expanded rapidly, bringing rapid growth to the company's automobile molding business.
The expansion of Weifeng International production capacity has contributed to the M & An operation. In the first three quarters, Weifeng International, a wholly-owned subsidiary, acquired a 100% stake in New Arts Industry and Yongxie Development for HK $259 million. Through this merger and acquisition, Weifeng International has obtained the land use rights held by its subsidiaries, plant and equipment under construction, and further expanded its production capacity, laying the foundation for Weifeng International to open up new customers and achieve stable performance growth. In the context of the current strong demand downstream, the performance gain brought about by the expansion of Weifeng international production capacity is gradually released.
The business of traditional light conveyor belt has maintained steady growth. The company is the largest light conveyor belt manufacturer in China, with a leading market share and obvious advantages in high-end products. At present, with the steady growth of the domestic economy, the light conveyor belt industry remains prosperous, its downstream is widely used, the market prospect is broad, and the market demand is still on the rise. In the first three quarters, the company further consolidated and enhanced the competitiveness of its products in this business sector, and orders increased steadily.
Exchange gains and losses continue to thicken the company's performance. The company's overseas business accounts for more than 30%, and some of its sales and purchases are settled in Hong Kong dollars and US dollars. At the same time, the performance commitment amount of Weifeng International is denominated in Hong Kong dollars, its statements are prepared in Hong Kong dollars as the base currency, and the company's consolidated statements are prepared in RMB. In the first three quarters, the RMB depreciated as a whole, resulting in non-recurrent gains and losses that had a positive impact on the company's profit level.
Risk factors: the promotion of intelligent sorting system is not up to expectations; the decline in product sales brought about by the macroeconomic downturn.
Maintain a "buy" rating. Considering that the company accounts for a relatively high proportion of overseas business and there is still some uncertainty about the RMB exchange rate in the future, we adjust our 19-year EPS forecast in 2018 to 0.56 won (after dilution, the original forecast for 18-year EPS in 19-year EPS is 0.54-0.66 yuan), and add 0.64 yuan to the 2020 EPS forecast. According to 17 times PE in 19, adjust the target price to 10 yuan and maintain the "buy" rating.