Events:
The company announced its 2018 annual report: in 2018, its operating income was 2.96 billion yuan, an increase of 11.3% over the same period last year, and its net profit was 94.224 million yuan, an increase of 159.4% over the same period last year.
Net profit has improved significantly, and performance is expected to continue to repair.
The company's 2018Q4 achieved an operating income of 700 million yuan in a single quarter, an increase of 3.4% over the same period last year, and a net profit of 22.371 million yuan, an increase of 166.0% over the same period last year. The main reasons for the significant improvement in the company's profit end are: 1) the fuel cell business of the company is progressing smoothly, generating revenue of 83.621 million yuan for the first time in 2018; 2) the lithium battery business is growing steadily, with revenue of 480 million yuan in 2018, an increase of 182.2% over the same period last year. 3) the disposal of 10% equity stake in Beijing hydrogen Pu in the fourth quarter, resulting in a thickened profit on investment income. We believe that the company's focus on the distribution of hydrogen fuel cell business in the past two years began to increase, superimposed on the company's business cost optimization and expense improvement, the company's performance is expected to continue to repair.
The gross profit margin remains stable and the ability to control fees has been enhanced.
The company's gross profit margin in 2018 was 12.8%, up from the same period last year. Among them, the gross profit margin of batteries and materials was 10.3%, down 2.6 pct from the same period last year; the gross profit margin of lithium batteries was 17.1%, down 1.9 pct from the same period last year; and the gross profit margin of fuel cells for new business was 49.8%. We believe that rising raw material costs and lower corresponding product prices are a drag on the company's traditional business gross margin, and the fuel cell business helps to improve the company's overall gross profit margin. The company's three rates totaled 10.4% in 2018, a decrease of 0.3pct compared with the same period last year, and the ability to control fees has been improved. Among them, the sales expense rate is 4.2% (year-on-year + 0.2pct); the management expense rate is 5.8% (year-on-year + 1.1pct), mainly due to the company's capacity transfer and increased costs for new business development; and the financial expense rate is 0.3% (year-on-year-1.7pct). It is expected that the company's profitability will continue to increase as the company's high-margin fuel cell products bring about an improvement in product structure.
Deep layout of hydrogen fuel cells to open up room for performance growth
The company is the leader of domestic lead-acid battery. in recent years, with the technological innovation of the battery industry, lead-acid batteries have been gradually replaced by lithium batteries and fuel cells. The company takes hydrogen fuel cell as the focus of strategic transformation and actively arranges the whole industry chain of hydrogen fuel cell. at present, it has completed the layout in key areas such as hydrogen production, membrane electrode, fuel cell stack, fuel cell engine system, vehicle operation and so on. In September 2018, the company signed an order with the Datong municipal government for 300 fuel cell buses totaling 1.08 billion yuan, marking the beginning of the company's fuel cell business. In the future, with the smooth progress of the company's fuel cell investment and market development, the superimposed countries will increase investment support in the fuel cell field, and the company is expected to realize corner overtaking with the help of hydrogen fuel cell and open up the space for performance growth.
Profit forecast and investment suggestion
It is estimated that the EPS of the company in 2019-2021 is 0.31,0.46 and 0.63 yuan respectively, and the corresponding PE is 105.5 times, 69.9 times and 51.3 times respectively. The company is the core target of the A-share layout of the hydrogen fuel cell industry chain, the future performance of high growth is expected to give the company a "holding" rating.
Risk hint: the prosperity of the industry is not as good as expected; the expansion of the company's products and customers is not as expected.
