Semiannual report of 2018: 2018H1 achieved operating income of 98 million yuan (YoY+ 6299%), homed net profit of 8 million yuan (YoY- 13.18%), corresponding net profit margin of 8.16% (YoY-6.84pct), of which Q2 company realized income of 59 million yuan (YoY+ 33.4%), homed net profit of 6 million yuan (YoY+ 32.5%) and corresponding net profit margin of 9.99% (YoY+9.65pct).
The traditional manufacturing business has been affected by the increase in downstream demand, which has led to a substantial increase in revenue. Split, manufacturing revenue during the reporting period reached 82 million yuan, an increase of 74.29% over the same period last year, including plastic pipe manufacturing equipment business revenue of 64 million yuan (YoY + 43.96%) and high-end machine tools of 17 million yuan (YoY + 671.35%). Mainly plastic pipe market downstream of plastic machinery equipment, affected by national and local industrial policies, the intensity of water conservancy investment, the speed of urban pipe network transformation and other factors, the demand and production of plastic machinery equipment market has been increased. Its high-end machine tool products have been ordered by users in the aerospace field. At the same time, the company has newly developed a flexible automatic production line composed of several five-axis machine tools and robots, which realizes the automatic processing of workpieces from blank to finished product, and meets the customized needs of customers. As a result, the company's overall revenue has risen sharply. The educational consulting business achieved revenue of 16 million yuan (YoY + 22.26%) due to the fierce competition in the overseas study and training industry, the company's overall revenue growth slowed down and the gross profit margin declined.
Due to the intensification of competition in downstream industries and the company's business development, the company's gross profit margin is under pressure. The company's comprehensive gross profit margin was slightly suppressed to 35.1% (YoY-1.76pct) during the reporting period. It is mainly due to the increase in sales revenue of high-end machine tools and plastic machines, the carry-over cost of sales has also increased, while the overall fierce training industry for junior and high school students to study abroad in the United States has led to a decline in its gross profit margin, which puts pressure on the company's overall profitability.
The company continues to expand the education industry and plans to acquire Mejem to cut into the field of early education. Mejem has the permanent right to use the international well-known children's early education brand "Mei Jim" in Asia. At the same time, as one of the top ten brands in the early education industry, it enjoys an absolute leading position. At present, the number of children's early education centers opened by Mei Jim in China has reached about 400, and its curriculum content is in line with international standards and is updated regularly. The number of stores keeps growing at a high speed, and operates in parallel with the dual mode of direct operation and joining. In order to ensure the reputation and quality of teaching. It is expected that after the completion of the merger and acquisition, it will become the main line of the company's education business development, and carry on the extension of the education business around the age group of 0-6 years old.
Profit forecast: assuming that the company successfully acquired Meijem in 2018 and listed the whole year, it is estimated that the company's net profit for 2018-2019 is 1.6 yuan and 199 million yuan, and the latest closing price is 36.7x corresponding to 2018 PE, which is given a "buy" rating.
Risk tips: lower-than-expected acquisitions, macroeconomic impact, education policy impact.