Report guide
In 2018, the company achieved operating income of 935 million yuan, an increase of 12.97% over the same period last year, and its net profit was 111 million yuan, down 3.89% from the same period last year.
Main points of investment
The annual performance is increasing slowly, and the market expansion needs to be accelerated.
In 2018, the company achieved operating income of 935 million yuan, an increase of 12.97% over the same period last year, and its net profit was 111 million yuan, down 3.89% from the same period last year. Due to the rise in the price of raw materials and the decline in product prices, the company's profitability has declined, the gross profit margin of products has dropped to 25.96%, and the net profit margin has dropped to 11.9%.
Specifically, from the perspective of the downstream market, the African market has stable customer resources, and the company has a high market share, and the company's performance in the region is stable. We focus on other market development. In 2018, the growth rate of business income in Asian market and European market will reach 25% and 33% respectively, with great growth potential. In the future, the company will further consolidate and enhance its foreign market share at the same time, speed up the development of domestic market and Asian market, and enhance the size and market influence of the company.
Convertible bond fundraising completed, production capacity is expected to double
In September 2017, the company announced that the annual production capacity of 2 million submersible pumps (including 1.8 million well submersible pumps and 200000 solar submersible pumps) was implemented through the issuance of convertible bonds to raise supporting funds; in August 2018, convertible bonds were successfully issued, raising funds of 281 million yuan, and the fund-raising project was steadily promoted. Through this production expansion, the company's total production capacity reached 3.85 million units and its production capacity doubled. Among them, the value of the new solar pump (pump + inverter and other complete sets of supply) is about 3000 yuan, which is 6 times the unit price of the well submersible pump. By the end of 2018, the project progress has been completed by 44.85%. The construction of the project will help to further increase the company's production capacity, alleviate the company's current capacity bottleneck, and further enhance the company's profitability.
Profit forecast and valuation
It is estimated that the company's revenue from 2019 to 2021 will be 1.11 billion yuan, 1.34 billion yuan and 1.62 billion yuan, an increase of 18.3%, 21.1% and 20.8% over the same period last year, and the net profit of its mother will be 131 million yuan, 158 million yuan and 191 million yuan, up 17.26%, 20.68% and 20.94% respectively. The EPS is 0.62 yuan per share, 0.73 yuan per share, 0.85 yuan per share, and the corresponding PE is 18.7,15.5,12.8 times, maintaining the "overweight" rating.
Risk hints: political and policy risks in product importing countries; domestic and foreign market development is not as expected; raw material prices continue to rise sharply.
