1Q19 performance exceeded market expectations
Huachuang Yang'an FY18 revenue year-on-year-12% to 1.86 billion yuan, return to the mother net profit year-on-year + 14% to 150 million yuan, corresponding to 0.09 yuan per share. The profit growth rate of the company was dragged down by the loss of traditional plastic pipe profile business and the substantial increase in asset impairment loss during the reporting period.
The company's 1Q19 revenue was-0.4% to 430 million yuan compared with the same period last year, and the home net profit was + 305% to 260 million yuan compared with the same period last year (securities subsidiaries reported monthly net profit from + 210% to 240 million yuan), which exceeded market expectations and mainly benefited from the growth of 1Q19 investment income (investment income + fair value change profit and loss + 174% / month-on-month + 89% to 530 million yuan).
Trend of development
The securities business accounts for a high proportion of self-operation and has sufficient flexibility in performance. The company's 18-year investment income totaled 920 million, accounting for + 28ppt to 50% of revenue compared with the same period last year. By the end of 18, the scale of investment assets was 17.6 billion yuan (available-for-sale financial assets + transactional financial assets + investment held to maturity), accounting for 84% of the total assets, accounting for 84% of the total assets. We expect the 19-year market situation to repair the company's higher proprietary investment allocation, which will bring the company more performance flexibility than the bank.
Traditional business is still a drag on the company's performance. The company's traditional plastic pipe profile business is affected by macroeconomic and market competition, production and sales continue to decline. The revenue of plastic pipe and profile business is-82% to 34.63 million yuan compared with the same period last year, and the gross profit margin is + 8.6ppt to 14.4% compared with the same period last year, but it is still at a loss. The company believes that it still has a large market in the development and construction of intelligent water affairs in the future, and has the ability to provide high-quality new environmental protection building materials products and services.
The employee stock ownership plan is launched to strengthen the incentive mechanism and demonstrate the confidence of management. The company first announced the stock repurchase plan on June 22, 18, which is used for employee stock ownership and equity incentive plan to further establish and improve the company's long-term incentive mechanism. On March 21, 19, the company increased the repurchase price ceiling to 15.26 yuan per share (the current share price is 16.2 yuan) and adopted the first phase of the employee stock ownership plan (with a total size of no more than 400 million yuan, accounting for 1.51% of the company's total share capital). By the end of 1Q19, the cumulative repurchase amount of the company accounted for 35% of the total repurchase funds.
Profit forecast
As a result of raising the ADT and investment return assumptions, we raised our 19-year profit forecast by 116% to 740 million yuan, and introduced a profit forecast of 750 million yuan in 2020.
Valuation and suggestion
The company's current share price remains neutral, with a neutral rating of 38.3 times Phand E and 1.9 times Phand B in 19 years, raising its target price by 46% to 15.71 yuan, compared with 1.8 times Phand B in 19 years, which is 3% lower than the current share price.
Risk
The stock and bond markets fluctuated sharply, and the market trading volume declined significantly.