Events:
The company released results KuaiBao: in 2018, the company achieved operating income of 720 million yuan, an increase of 36.92% over the same period last year, and a net profit of 5.7538 million yuan, down 61.86% from the same period last year.
Main points of investment:
Domestic precision metal link parts leader, 2018 performance to achieve small profits. Since listing, the company has successively introduced Italian automatic hinge assembly production line and Siemens UG 3D mold design software, promoted intelligent manufacturing technology in all directions, and developed into a domestic leading enterprise of precision metal links. In 2018, the company achieved a net profit of 5.7538 million yuan, down 61.86% from the same period last year, mainly due to the poor quality of customer orders in the ① economy, and the sales price could not transmit the upward pressure on the price of upstream raw materials, resulting in a decline in gross profit margin. ② due to the impact of environmental protection to capacity, the company's steel, steel balls, cartons and other raw material prices are high, resulting in a substantial increase in costs. After the early intelligent, automatic production transformation and modern plant construction investment of ③ Company, the production capacity was released less than expected.
Complete the acquisition of Zebao shares and enter the cross-border e-commerce industry. In February 2019, the company completed the acquisition of 100% equity interest in Zebao shares at a consideration of 1.53 billion yuan, of which 639 million yuan was paid in cash and 891 million yuan in the form of issuing 111 million shares. Zebao share performance commitment: the promised net profit realized in 2018-2020 is not less than 108 million yuan, 145 million yuan and 190 million yuan respectively. Zebao is a leading "Internet +" brand product company in China, located in the "boutique" route, opening stores in e-commerce platforms such as Amazon.Com Inc to engage in B2C business, through vertical and fine operation. to provide high-quality and cost-effective goods for middle-class consumers in developed countries The products are mainly concentrated in power supply, Bluetooth audio, small household appliances, computers and mobile phones, personal health care and other categories, the number of core SKU is about 200. From January to August 2018, Zebao shares achieved operating income of 1.291 billion yuan and non-return net profit of 48.6535 million yuan.
The state has continuously issued favorable policies, and the cross-border e-commerce industry has entered the channel of rapid development. In recent years, the state has continuously issued favorable policies for cross-border e-commerce, aimed at encouraging and supporting the development of cross-border e-commerce. At the end of 2012, the state selected five cities, including Hangzhou, as the first batch of cross-border e-commerce pilot cities in China; from 2013 to 2014, nine cities, including Shenzhen, were selected as the second batch of pilot cities; and in 2016, the State Council set up a new batch of pilot areas in 12 cities, including Tianjin. The General Administration of Customs, the Ministry of Finance, the National Taxation Bureau, the people's Bank of China and the State Administration of Foreign Exchange have successively issued a number of documents to set up and improve supporting links for the development of cross-border e-commerce, facilitate the development of cross-border e-commerce, and enter a golden period of development of cross-border export e-commerce industry. continue to maintain rapid growth. The overall transaction size of China's import and export cross-border e-commerce (including B2C and B2B) reached 7.6 trillion yuan in 2017, accounting for 27.35% of China's total import and export trade, and is expected to reach 9 trillion yuan by 2018. BABA Research Institute estimates that the transaction volume of the cross-border e-commerce market will reach 12 trillion yuan in 2020, accounting for 37.60% of the total import and export volume. We believe that the export cross-border e-commerce industry is in a period of rapid development, with large market space and promising prospects in the future.
Coverage for the first time, giving a "overweight" rating. Considering that Zebao shares achieved results and became a wholly-owned subsidiary of the company on December 31, 2018, the company's net profit from 2018 to 2020 is expected to be 6 million yuan, 148 million yuan and 199 million yuan respectively, and the corresponding EPS is 0.02 yuan per share, 0.46 yuan per share and 0.63 yuan per share, respectively, and the corresponding PE is 503,20 and 14 times respectively according to the closing price of 9.08 yuan on March 7. Considering the rapid development of the cross-border e-commerce industry, the company, as the leading export cross-border e-commerce company in China, will fully benefit from the development of the industry and will be given an "overweight" rating for the first time.
Risk tips: the development of precision metal links industry is not as expected; the development of cross-border e-commerce industry is not expected; the risk of increased competition in cross-border e-commerce market; the uncertain impact of exchange gains and losses on the company's performance.