The net profit of home ownership in 2018 was + 47.57%, and the gross profit margin of Hong Kong Machinery remained high: the company released its annual report for 2018, with a total revenue of 21.812 billion yuan, which was-0.21% year on year, which was basically the same as that of last year; the net profit of home ownership was 443 million yuan, + 47.57% over the same period last year. The non-return net profit is 121 million yuan,-56.33% compared with the same period last year. The non-recurrent profit and loss mainly comes from the reversal of the provision for impairment of receivables and the reduction of long-term receivables due within one year of the company's "construction-transfer" project. From a product point of view, the company's main port machinery revenue is 14.984 billion yuan, year-on-year + 1.68%, accounting for 68.70% of the company's revenue, gross profit margin 23.88%, year-on-year + 1.87pct, port machinery gross profit margin remains high, reflecting the company's strong bargaining power in the port machinery plate and structural optimization brought about by automated terminals. The marine-based heavy equipment business achieved revenue of 2.746 billion yuan, year-on-year-18.87%, gross profit margin of 5.00%, year-on-year-3.89pct, still at the bottom. Overall, the company's 2018 gross profit margin was 17.10%, year-on-year-0.47pct.
Exchange losses lead to an increase in the rate of financial expenses: in order to keep comparable with 2017, the R & D expenses in 2017 will be listed separately from the management expenses, then the management expenses in 2018 will be 1.142 billion yuan, the expenditure rate is 5.24%, year-on-year + 0.48pct, mainly due to the increase in employee salaries; R & D expenses 673 million yuan, expense rate 3.08%, year-on-year-0.13pct Financial expenses 1.522 billion yuan, expense rate 6.98%, year-on-year + 3.51pct, mainly due to interest payments and exchange losses caused by fluctuations in the exchange rate of RMB against the US dollar; the company's sales expenses of 116 million yuan, expense rate of 0.53%, year-on-year-0.03pct. R & D expenses and three rates total 15.83%, year-on-year + 3.83pct.
The offshore sector has ended a large amount of money, and its order-taking capacity has improved significantly: since 2014, the fall in oil prices has led to a cold winter for the global marine industry. Self-rising, low utilization of semi-submersible platform and excessive surplus capacity lead to significant asset impairment of the company. In 2018, the company recorded an impairment loss of assets of-13 million yuan, marking the end of a large amount of deduction in the marine sector. In 2018, the company's newly signed contracts for marine engineering and steel structure totaled US $903 million, + 26.47% compared with the same period last year, of which 583 million yuan was newly signed by the marine sector, with a significant improvement in order-taking capacity, and marine equipment is expected to usher in a recovery.
Wind power industry chain building, photovoltaic business gains: offshore wind power business made a new breakthrough, in 2018 won the first offshore wind farm construction general contract project. Long Yuan Zhenhua has been deeply cultivated in the field of offshore wind power for many years, and is the only enterprise in China that has successfully mastered the rock-socketed technology and core equipment of large-scale single pipe pile, and has successful construction experience. With the construction of offshore wind farms at home and abroad entering a new period of opportunity, through the integration of industry resources, the company is expected to build the whole offshore wind power industry chain. There are many gains in photovoltaic business, 15 distributed photovoltaic services have been completed since 2016, and its own brand EZ has been awarded the "first Brand of distributed Photovoltaic system Integration" in Shanghai.
To build a digital intelligent ship maintenance service platform: the company strives to create a Terminexus platform to provide spare parts online trading platform for ship supporting enterprises, shipowners and maintenance companies, and equipment supporting enterprises to provide online maintenance guidance and training services. The platform applies 3D visualization technology to ship maintenance to reduce communication costs, time costs and personnel learning costs in the maintenance process, so as to improve the efficiency of maintenance operations and create economic value. The launch of the platform has laid a solid foundation for the further development of the port after-machine market, and provides a global after-sales service guarantee for Chinese ships and supporting enterprises to participate in international competition.
Profit forecast and investment rating: the company is in an absolute leading position in the Hong Kong machinery industry, marine clearance is relatively sufficient, it is expected that the company's performance has entered an upward channel. It is estimated that the company's net profit in 2019-21 is 563 million, 659 million, 833 million yuan, corresponding to EPS 0.11,0.13,0.16 yuan, corresponding to PE39, 33, 26X. Maintain a "buy" rating.
Risk hint: the post-machine market development of Hong Kong is not as expected and the recovery of global trade is lower than expected.