Events:
The company issues the 2018 annual report and the 2019 quarterly report. In 2018, the company realized revenue of 11.191 billion yuan (YoY-22.54%) and net profit of 45 million yuan (YoY+89.16%), while 2019Q1 achieved revenue of 2.038 billion yuan (YoY+0.83%) and net profit of 32 million yuan (YoY+121.60%).
Comments:
Financial expense control the decline in the impairment of superimposed assets promotes the gradual improvement of the company's performance. In 2018, when the company's revenue was affected by the domestic photovoltaic policy adjustment, the overall return net profit still showed a rapid growth. The company carries on the financial management control through the strategic management thinking, in the cost management ability, the inventory turnover ability, the accounts receivable turnover aspect all obtains the further enhancement, the company annual financial expense 397 million yuan (YoY-26.79%). At the same time, the impairment loss of the company's assets recorded 15 million yuan, a decrease of 226 million yuan compared with 2017. 2019Q1 financial expenses and asset impairment continued to improve. 2019Q1 financial expenses recorded 93 million yuan, a decrease of 33 million yuan over the same period last year, while asset impairment recorded 4 million yuan, a decrease of 42 million yuan over the same period last year.
All in overseas, the internationalization strategy is effective. The number of units installed in the global overseas market increased by 6% in 2018 compared with the same period last year. Under the influence of domestic policy adjustment, the company made every effort to develop overseas markets. In 2018, the company achieved 2.3GW shipments in overseas markets, with operating income exceeding 5.924 billion yuan, an increase of 55.48% over the same period last year. The share of overseas sales rose rapidly from 26.37% in 2017 to 52.9% in 2018, with a global market share of more than 4%. In 2019, the company will actively explore "EP", "EPC+Bridge Financial" and other business models in Western Europe, Japan, South Korea and other low-risk and high-circulation markets, continue to improve the building of overseas sales team, and strive to account for more than 80% of overseas sales for the whole year.
Mainly leaders and poverty alleviation projects, the contribution of EPC has increased. In 2018, the company's EPC project won the bid 486MW (including Qinghai Delingha 300MW leader and 11 poverty alleviation projects cumulative 125MW), started 302MW, connected to the network 312MW, exceeding the annual target, which is an important source of profits for the company at present. In 2018, the revenue of EPC business was 2.654 billion yuan (YoY-4.74%); the gross profit was 507 million yuan (YoY+65.51%); and the gross profit was 19.11%, up 8.11pct from the same period last year.
Semiconductor in-depth layout, the second construction of the company's core competitiveness. At present, the company's direct layout in semiconductors mainly includes Xuzhou Ruixin Electronics Industry Fund (limited partnership) and raising 5 billion yuan to invest in recycled wafers, semiconductor single crystal furnaces and other fields. By optimizing the product structure of the company's silicon industry chain, on the one hand, it can reduce the risk caused by fluctuations in the photovoltaic industry; on the other hand, it can effectively enhance the company's profitability and build the company's core competitiveness for the second time. We believe that the company's rich resources and channels in the silicon industry for many years not only help to realize the effective linkage between the semiconductor business and the company's business, but also help the company to introduce professional external investors with semiconductor resources through capital operation.
Profit forecast and valuation:
Taking into account that the improvement in formula cash flow will continue to reduce the company's financial expenses and the release of semiconductor business performance, we update the company's EPS forecasts for 2019-2021 to RMB0.04,0.08,0.08 respectively, corresponding to price-to-earnings ratios of 209.76, 101.83 and 100.56 times, maintaining its "cautiously recommended" investment rating.
Risk Tips:
Photovoltaic module business declined more than expected; photovoltaic module export share increased faster than expected; photovoltaic EPC business declined faster than expected; semiconductor business progress was not as expected.