Events:
The company issued a forecast for the first quarter of 2019, which is expected to achieve a net profit of 132.9838 million yuan to 166.2298 million yuan, an increase of 20% and 50% over the same period last year.
Main points of investment:
The performance in 2018 is good, and the piling business has obvious advantages. The company achieved revenue of 5.75 billion yuan in 2018 (the company's revenue target of 5.18 billion yuan in 2018), an increase of 45.73% over the same period last year. The net profit attributed to shareholders of listed companies was 430 million yuan, an increase of 165.33% over the same period last year. The increase in profits during the reporting period was mainly due to stable demand in the construction machinery market and growth in business income, and avmax completed its fourth equity delivery during the year, resulting in a merger increase. Revenue increased significantly in 2018 compared with the same period last year, mainly due to the recovery of the engineering industry and the company's implementation of differential competitive strategy. Since 2018, the company has concentrated superior resources to expand and strengthen the piling machinery business, maintaining a good head competitive advantage in this field.
2019 got off to a good start, maintaining an optimistic outlook for the construction machinery business. Affected by the "infrastructure deficiency board" and the relatively loose monetary policy, the domestic excavator industry sold a total of 74779 units in the first quarter of 2019, an increase of 24.5% over the same period last year; at the same time, the demand growth rate of the piling machinery industry is still considerable. Boosted by this, the company's earnings growth in the first quarter of 2019 is expected to be good. We believe that in 2019, the company will continue to strengthen the competitiveness of the piling business and strengthen the resource allocation of the excavator business, which will become a strong supporting point for 2019 performance.
Aviation equipment and special equipment business remains a bright spot. In terms of aviation equipment, since the acquisition of AVmax in October 2016, the company's shareholding in Avmax has reached 86.66%. AVmax is the high-quality target of the global aircraft aftermarket, with outstanding profitability, and its performance has grown steadily since it was acquired. It achieved an income of 1.08 billion yuan and a net profit of 220 million yuan in 2017, and is expected to maintain its growth trend in 2018. Under the acquisition agreement, the delivery of the remaining 13.34 per cent of AVmax's stake is expected to be completed in the first half of 2019, when Avmax will become a wholly owned subsidiary. In terms of special equipment, the core product waterway amphibious multi-function engineering vehicle has achieved batch order delivery, reflecting a good ability of military research and development and industrialization.
With the introduction of major state-owned shareholders, the sustainable development of the company is guaranteed. On January 26, 2019, Mr. he Qinghua, the controlling shareholder, and Guangzhou Wanli signed the "share transfer Agreement" and the "Voting entrustment Agreement": he Qinghua transferred his 6.1966% stake in Shanhe Intelligence to Guangzhou Wanli at a conversion price of 8 yuan per share; at the same time, he Qinghua intends to entrust to Guangzhou Wanli the voting rights, proposal rights and other corresponding shareholder rights involved in his 8% shares in Shanhe Intelligence. At the same time, Guangzhou Wanli plans to accept 8.1579% of the total Shanhe intelligent shares held by other shareholders, and Guangzhou Hengyi, a related party of Guangzhou Wanli, intends to transfer 6.0772% of the total Shanhe intelligent shares held by other shareholders.
After the completion of the transfer of shares, the entrustment of voting rights and the transfer of shares of other parties, Guangzhou Wanli will become the single shareholder with the largest share of voting rights, that is, the controlling shareholder of the company. Guangzhou Municipal people's Government has become the actual controller of Shanhe Intelligence. We believe that the introduction of major shareholders of state-owned assets, on the one hand, is expected to bring convenience for the company to expand its business in Guangdong; more importantly, it is expected to solve the problem of sustainable development of the company, which is beneficial in the long run.
Maintain the buy rating. It is estimated that the net profit of the company from 2018 to 2020 is 4.32,5.06 and 557 million yuan respectively, and the corresponding EPS is 0.40,0.47 and 0.51 yuan per share respectively. According to the latest closing price, the corresponding PE is 18,15 and 14 times respectively, maintaining the buy rating.
Risk tips: the risk of a sharp decline in the growth rate of the construction machinery industry; the risk that AVmax performance growth is not as expected and the acquisition progress is not as expected.
