The company's 18Q3 achieved revenue of 12.85 billion (+ 47%), well ahead of market expectations, with cumulative revenue of 29.5 billion (+ 15%) in the first three quarters, and Q3 revenue growth accelerated significantly compared with the first half of the year. 2018H1 income 16.6 billion (+ 2.9%), of which foreign trade income 16.1 billion yuan (+ 4.4%), chemical income 450 million yuan (240 million yuan less than 17H1, mainly due to Huarong chemical electrolyte sales decline). On the profit side, 18Q3 deducted 349 million of its non-attributable net profit in a single quarter, a year-on-year increase of + 68 per cent. In the first three quarters of 2018Q1-Q3, the accumulated non-attributable net profit was 582 million (year-on-year-4.2%), and the cumulative attributable net profit was 740 million (year-on-year + 23%). Among them, the investment income of 18H1 is 657 million, which is 587 million higher than that of 17H1, which is mainly due to the investment income brought by the transfer of Lansi Group's equity.
The devaluation of RMB and the global macroeconomic downturn are good for the company's main foreign trade business. The company's main business is clothing foreign trade (supply chain service), representing customers including Uniqlo, Inditex, Primark and so on. It is basically a cost-effective international brand. The devaluation of the RMB will increase the orders of customers of these brands in China, at the same time, the global macro-economy is relatively depressed, and the sales performance of high performance-price brands is better than that of brands. The company also benefits from being a world-class clothing supplier. The advance payment of the company at the end of this period is + 39% compared with the same period last year, mainly for the funds advanced to upstream suppliers. It is expected that the main business of Q4 foreign trade will also maintain a high growth rate. I have more confidence in the company's revenue growth in 2018.
Profit forecast: the company completed a major asset restructuring in 2017, and the parent company injected its major clothing foreign trade subsidiaries into the listing platform, injecting the overall performance of the subsidiary to exceed the performance commitment at the time of the transaction. The company has mature experience in collectivization operation, strong competitive strength in foreign trade and chemical industry, sound investment income and strong foreign exchange risk control ability. Although the income of lithium battery business fluctuated in 2018, the main business of foreign trade grew strongly. From 2018 to 2020, we expect the company to achieve operating income of 39.5 billion yuan, 42.4 billion yuan and 45.9 billion yuan respectively, and net profit of 970 million yuan, 1.06 billion yuan and 1.29 billion yuan or EPS of 0.62 yuan, 0.67 yuan and 0.82 yuan respectively. The current share price is only 8.2x PE in 2018, maintaining a "highly recommended" rating.
Risk hint: lithium battery electrolyte sales continued to decline, chemical business revenue and profit growth did not meet expectations.