Net profit of Q1-Q3 in 2018 increased by 21.03% over the same period last year.
The company released its three-quarter report for 2018 on the evening of October 25. 2018Q1-Q3 realized operating income of 715 million yuan (+ 70.94%) and net profit of 105 million yuan (+ 21.03%), deducting non-net profit of 83 million yuan (- 0.67%), corresponding to 0.74 yuan (- 31.48%) of EPS, and its performance was lower than expected. The company's performance growth comes from the diamond line, wireless charging coil, power battery ear, lower than expected performance is mainly due to the photovoltaic industry 530 new deal diamond line demand and price drop sharply. The net profit of Q3 was 4.5671 million yuan, down 88.7% from the same period last year and 63.6% from the previous month. We expect the company to maintain its "overweight" rating with a net profit of 1.23,1.98 and 312 million yuan in 18-20 years and a target price of 27.80-30.58 yuan.
In 2018, the gross profit margin of Q1-Q3 decreased by 5.63pct compared with the same period last year, and the decrease of net profit margin was greater than that of gross profit margin.
The company's 2018Q1-Q3 gross profit margin was 33.06%, down 5.63pct from the same period last year, and the net profit rate was 14.69%, down 6.06pct from the same period last year. The company's gross profit margin in the third quarter was 13.42%, down 23.69pct from the same period last year, and net profit was 2.55%, down 19.2pct from the same period last year. In the first three quarters of 2018, fees increased rapidly, taxes and surcharges increased by 152.21%, sales expenses increased by 225.85%, operating expenses increased by 91.62%, R & D expenses increased by 163.47%, and financial expenses increased by 126.04%.
Operating cash flow has improved
The net cash flow of the company's 2018Q1-Q3 operating activities was 97 million yuan, an increase of 1940% over the same period last year. The reason for the sharp improvement in operating cash flow in the first three quarters of the company is mainly due to the fact that the company received 608 million yuan (+ 93.58%) in cash for selling goods and providing services, and 312 million yuan (+ 27.35%) in cash for buying goods and receiving services. Diamond line business is seriously affected by the photovoltaic new deal, the company's performance this year and next year faces challenges photovoltaic 530 new deal led to intensified competition in the diamond line industry, diamond line demand and prices have dropped sharply.
The company's 2018Q1 net profit was 87.93 million yuan, 2018Q2 net profit was 12.55 million yuan, and 2018Q3 net profit was 4.57 million yuan. The net profit in the third quarter fell 88.67% from the same period last year, and 63.62% from the previous month. The prepaid account is 50.95 million yuan (- 35.4%). We think the company predicts that the demand for the diamond line may decline in the second half of the year and reduce the purchase of raw materials. The company's third quarterly report shows that the advance payment is 42 million yuan, down 46.22% from the end of 2017, and the amount received in advance is 22 million yuan, down 12.2% from the end of 2017. We expect the company's fourth-quarter results to continue to be under pressure.
Maintain the "overweight" rating
Photovoltaic 530 New deal has a serious impact, resulting in the company's sales revenue of the Diamond Line in the first three quarters of 2018 was lower than expected. We have adjusted the profit forecast of the company's Kumgang line business, and it is estimated that from 2018 to 2020, the revenue of the company's diamond line business will be 1.035,1401and 2.048 billion yuan (the previous value is 1.277,15.42 million yuan), and the net profit of returning to the mother will be 1.23,1.98 and 312 million yuan respectively (the previous value is 2943.84 billion yuan), and the corresponding EPS will be 0.86 yuan 1.39exp 2.19 yuan. Comparable company in 2019 valuation of 15 times the average PE, in view of the company is the diamond line industry leader, wireless charging coils and lithium battery ears are expected to release volume in 19 years, to 2019 20-22 times PE, corresponding to the target price of 27.80-30.58 yuan, maintain the "overweight" rating.
Risk tips: the risk of high customer concentration; the risk of a sharp drop in the price of the diamond line; the risk of rising costs; the risk that the growth rate of wireless charging coils and battery ears is not as expected.