Items:
On the evening of April 23, 2019, the company released its 2018 annual report, with an operating income of 1.242 billion yuan and a net profit of 198 million yuan during the reporting period.
Comments:
The smart grid + new energy business system has taken shape, and the table has brought a rapid increase in the scale of the business. In 2018, the company achieved an operating income of 1.242 billion yuan, including 409 million yuan for transmission and distribution products, 315 million yuan for instruments, 146 million yuan for charging piles, 251 million yuan for lithium diaphragm and 121 million yuan for others, with a total net profit of 198 million yuan. The company's "smart grid + new energy" business system is basically completed, with the two sectors accounting for 58% and 31% of the revenue in 2018, respectively, but the new energy business sector is highly profitable. The gross profit margins of charging piles and lithium battery separators reached 29% and 52%, respectively. In February 2018, Hongtu separated and entered the listed company, which affected the volume of revenue of the company in 2018 has increased significantly. The company has entered the business form of two-wheel drive. With the investment of Luoyang state-owned assets, it will inject new growth momentum into the company, and it is expected to usher in a multi-business development highway in 2019.
Lithium diaphragm business is under pressure, and its production capacity will reach 200 million square meters per year in 2019. At the end of 2018, the production capacity of lithium battery diaphragm reached 110 million square meters, the annual output of lithium diaphragm reached 9280 million square meters, the income of ceramic diaphragm was 108 million yuan, and the income of lithium battery diaphragm was 142 million yuan. At present, the company's No. 4 and No. 5 production lines are about to reach production, reaching 200 million square meters of production capacity by the end of the second quarter of 2019, and annual shipments are expected to reach 150 million square meters. In 2018, Liaoyuan Hongtu failed to fulfill its performance commitment, so the goodwill impairment was carried out, and the compensation obligor carried out share compensation. We believe that the company's diaphragm business is under slight pressure due to industry pressure during the year and is expected to achieve rapid growth in 2019 with the release of new production capacity.
The charging pile business has become a bright spot, and the operation business has entered the top ten in the country. The subsidiary Nanjing Nengrui charging pile manufacturing and operation business ushered in the industry drive in 2018. With the general improvement of domestic charging pile utilization, the company's operating business profitability has also been greatly improved. According to the statistics of EVCIPI, the actual operating scale of charging piles in Nanjing Nengrui ranks among the top ten in the country. The company has also obtained the first opportunity in the charging service cooperation with a number of large logistics enterprises, and has built large-scale charging stations in Shunyi and Tongzhou, Beijing. We believe that the charging service industry is at a profit inflection point for the industry, and the market for inclined charging piles with local subsidies is expected to increase rapidly.
Profit forecast, valuation and investment rating. With the landing of Luoyang state-owned assets, the company's charging pile business is expected to have more room for development, and taking into account the company's lithium diaphragm performance bet compensation and equity buyback cancellation, we have made adjustments to the company's performance. We estimate that the company's EPS will reach 0.60,0.76 and 0.91 yuan in 2019-2021 (the original forecast EPS for 2019 and 2020 will be 0.64,0.85 respectively), and the corresponding share price PE will be 21, 17 and 14 times respectively. We give a "recommended" rating to the company's power grid and new energy business based on 20 times and 25 times respectively, with a target price of 14 yuan according to the 2019 performance valuation of 23.4 times.
Risk hint: Luoyang state-owned equity investment is not as expected, charging pile local subsidy policy is not as expected.
