Items:
The company released its third quarter report of 2018 on October 29. During the reporting period, the company achieved a total operating income of 2.536 billion yuan, an increase of 15.82% over the same period last year, and a net profit of 353 million yuan, 61.96% over the same period last year.
Comments:
Precision molding business is growing rapidly, and the company's performance has greatly increased compared with the same period last year. In the third quarter, the company achieved operating income of 939 million yuan, an increase of 14.84% over the same period last year, and a net profit of 137 million yuan, an increase of 94.44% over the same period last year. The sharp increase in the company's profits in the third quarter is largely due to the rapid development of the company's precision molding business. At present, the company has a perfect layout in the molding field, and with the further integration of Sino-Yingdong Molding and Weifeng International in the field of precision molding, the R & D capability and product quality of the company's high-precision molding business have been further improved. this also ensures that the company's precision molding products always maintain a leading level in the industry, and this business is expected to continue to improve the company's profitability in the process of technology integration and product upgrading.
The strong demand and the expansion of production capacity have contributed to the performance of Weifeng International. In the first three quarters, there was a strong demand for precision molding downstream, and the growth of Weifeng International, a subsidiary of the company, made a great contribution to the improvement of the company's performance. at the same time, Weifeng International acquired a 100% stake in Xinyi Industry and Yongxie Development at a price of HK $259 million. Through this merger and acquisition, Weifeng International has obtained the land use rights held by its subsidiaries, plants and machinery under construction, and further expanded production capacity. To lay 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 is growing steadily. 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.
RMB depreciation, exchange gains and losses increase the performance of the company. 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. Maintain the annual EPS forecast of 0.56, 0.59 and 0.64 yuan in 2018-19-20, and maintain the target price of 10 yuan and the "buy" rating.