This report is read as follows:
The company's 2018 performance is in line with expectations, with the release of the company's production capacity, the company's output has increased steadily. The company is a leading enterprise in China's bead steel wire industry, and the release of future output will steadily improve the company's performance.
Main points of investment:
Maintain the "overweight" rating. The company's annual operating income in 2018 was 2.439 billion yuan, up 29.41% from the same period last year, and the net profit returned to its mother was 205 million yuan, up 56.28% from the same period last year. Taking into account the running-in period of the company's new capacity release process, the company's 2019 EPS in 2020 is 1.22max 1.40 yuan (formerly 1.33max 1.61 yuan), and the new 2021 EPS is forecast to be 1.53 yuan. Taking into account the high certainty of the company's long-term growth, referring to similar companies, give the company 2019 PE 17 times valuation, raise the company's target price to 20.74 yuan (the original 19.08 yuan), and maintain the "overweight" rating.
The output has increased steadily and the main business has developed steadily. With the gradual landing of the company's fund-raising projects, the company's production capacity has increased steadily. In 2018, the output of bead steel wire, rubber hose steel wire and steel cord was 24.96,3.85 and 78200 tons respectively, an increase of 1.65,0.76 and 23200 tons respectively over 2017. The downstream demand of the company is good, with an average production and sales rate of 97.75% in 2018, and the production and sales rate remains high. It is expected that with the increase of the company's capacity utilization, the company's production and sales will further increase.
Long-term borrowing has fallen sharply, and financial costs have fallen steadily. In 2018, the company's long-term borrowing fell by 47 million, or 65.28%, to 25 million yuan. With the decline of the company's long-term borrowing, the company's financial expenses decreased steadily: 22 million yuan in 2018, a decrease of 26 million yuan, or 53.84 percent, compared with 2017.
The industry pattern is good, and the company's competitive advantage has improved steadily. The company is the leader of China's bead steel wire industry and participates in the formulation of industry standards. The domestic market share of bead steel products is maintained at about 30%. It is the largest bead steel wire manufacturer in China and has a solid position in the industry. The competition pattern of bead wire industry is stable, and the entry barrier is high. As the leader of the industry, with the release of its own production capacity, the company's competitive advantage has improved steadily.
Risk hint: tire production is down sharply.