Main points of investment:
The company released 2018 results KuaiBao: annual operating income of 3.244 billion yuan (YoY + 57.2%), net profit of 314 million yuan (YoY + 81.5%), of which Q4 operating income was 715 million yuan (YoY + 15.7% YoY-30.4%), net profit of Q4 was 8 million yuan (QoQ-84.0% QoQ-94.7%). Prior to the company's performance forecast for the whole year range of 435-485 million yuan, the performance is significantly lower than expected.
The release of the project was lower than expected, the cost increased significantly, and the performance of Q4 fell sharply. The main reasons are: (1) due to the decline in shipments in the domestic smartphone market and other factors, Apple Inc's mobile phone sales in the fourth quarter of 2018 were significantly lower than expected; at the same time, although the company's products were included in the BOM list of some domestic mobile phone brands in the second half of 2018, the progress of mass production of the new variety was slow, resulting in the actual order of Changzhou Phase 1 in the fourth quarter obviously lower than the budget, and the profit was about 3, 0 yuan less than the budget. (2) the company's revenue grew by about 57% in 2018, and the total amount of accounts receivable increased at the end of the year. Coupled with the impact of the external economic environment and financial tightening, the company's customer payback cycle was lengthened. In line with the principle of financial prudence, the company's provision for bad debts increased by about 3, 5 million yuan at the end of 2018. (3) the production lines of Phase II and Phase III of Changzhou functional material Industry Base were put into production in the fourth quarter of 2018, and the Chengdu PBO fiber project also entered the equipment commissioning period at the end of the year. After the completion and commissioning of the new project, on the one hand, it led to a substantial increase in fixed expenses such as depreciation, expansion of personnel scale, trial production of production lines and other factors led to a substantial increase in the company's internal costs; on the other hand, due to the long cycle of new production lines and new product introduction, the above new projects failed to achieve profits in the fourth quarter but resulted in a certain loss, resulting in an overall profit of about 2, 5 million yuan less than expected. (4) the company's business scale expanded significantly in 2018, while a number of new projects were under construction, in order to meet the capital needs of daily operation and long-term development and ensure the safety of the capital chain, the company increased its bank financing efforts, coupled with the impact of changes in the domestic financial market environment, bank financing costs increased, resulting in the company's financial expenses increased by more than 1, 0 yuan than expected. (5) in the second half of 2018, in order to further improve the comprehensive budget control system, the company hired well-known external training institutions to conduct a number of closed and centralized special training for the management team and core staff, with a total of nearly 2,000 trainers. coupled with other consulting projects, the management expenses increased by nearly 1% in the fourth quarter than expected., 0 yuan. The option exercise in the company's employee equity incentive plan also led to an increase of more than 5 million yuan in management expenses in the fourth quarter than expected.
Short-term factors are bad for performance, long-term benefit from the general trend of localization instead of. The company's Changzhou Phase I, II and III New Materials Project focuses on the import substitution market to realize the localization of upstream key raw materials. Due to the long certification cycle of new material products, the short-term failure to contribute income in time after the project was put into production, the increase in costs and other reasons drag down the performance. The company occupies a leading position in various business fields in China and has benefited from the general trend of localization for a long time. Although the growth rate of electronic consumer goods such as mobile phones has slowed down around the world, the stock replacement market of the first phase of the company's high-end tape project will continue to grow with the continuous introduction of customers and product numbers; the second phase of the aluminum-plastic film project covers domestic first-line soft package power battery companies, including Funeng Technology, Jiewei Power, Duofuoduo New Energy, etc., and the domestic power soft bag battery market share exceeds 70%. The company Changzhou aluminum film plant phase 1 3 million square meters / month put into production, the second phase 3 million square meters / month production line is expected to produce in July 2019, the company plans to achieve a total production capacity of 1500 square meters / month, is expected to become the new global aluminum film business leader; Phase III optical film project in LCD, OLED and other upstream key film materials in the field of multiple layout, long-term benefit from the localization of display materials.
Investment advice: maintain the "overweight" rating, as the Q4 performance is significantly lower than expected, downgrade the profit forecast, estimated 2018-20 return to the mother net profit of 3.14,5.30, 708 million yuan (the original value of 4.53,7.09, 1.011 billion yuan), corresponding to EPS 0.27,0.46, 0.62 yuan, PE 44X, 26x, 19X.
Risk hint: the release progress of the new project is not as expected, and the intensification of market competition leads to a drop in product prices.