The company released the 2019 mid-term report: revenue of 908 million yuan, + 36.04%; net profit of 63 million yuan, + 135.53%; earnings per share of 0.12 yuan, + 140.00%; Roe increased from 2.48pct to 4.34% compared with the same period last year, which is in line with market expectations. In the second quarter alone, revenue was 473 million yuan, + 5.19% year-on-year, + 8.49% month-on-month, and net profit was 44 million yuan, + 27.91% year-on-year and + 131.58% compared with the same period last year.
Performance has recovered strongly and profitability has continued to pick up. The company has got rid of the influence of judicial cases, and its revenue and performance have returned to growth since 17 years. In the past two years, the compound growth rate of revenue has reached 41.12%, the performance has turned from losses to profits, and the revenue and performance have maintained rapid growth from January to June 2019. The year-on-year growth rate reached 36.04% and 135.53% respectively, maintaining a strong recovery momentum. In terms of gross profit margin, 2019H1 raised 3.87pct to 21.05% year-on-year, net profit margin increased 2.86pct to 6.86%, and profitability has rebounded to pre-2013 levels. The gross profit margin in the second quarter was 23.55%, a sharp increase of 5.21pct from the previous quarter, and the net profit rate was 9.11%, a significant increase in 4.70pct compared with the previous quarter.
All kinds of business are in full bloom, and the core competitiveness is highlighted. During the reporting period, the company's various businesses bloomed in an all-round way: 1) traditional advantage markets such as metallurgy, petrochemical and electrical equipment were further strengthened, with revenue reaching 540 million yuan, a substantial increase of 98.5% over the same period last year. 2) the rail transit market expanded and expanded to expand its business to subway projects in more than 20 cities such as Beijing, with revenue doubling to 160 million yuan, accounting for 17.5%. 3) establish a leading position in the field of nuclear power, winning the bid for "Hualong No.1" and "Shidao Bay" two "global first pile" demonstration projects; steady progress in the field of wind power, substantial growth in the field of photovoltaic, nuclear power and new energy revenue reached 127 million yuan, a sharp increase of 262.86% compared with the same period last year. The company's three major business areas are all growing at a growth rate of more than 98%, fully blooming, highlighting the company's core competitiveness in the field of high-end special cables.
The strategy of "borrowing ships to go to sea" has been steadily promoted, and overseas business has continued to expand. The company combines the sales area and product field to build a "four zones, two departments and one department" sales structure, in which the International Division adopts the strategy of "borrowing ships to go to sea" and gradually infiltrates overseas markets through cooperation with large central enterprises and state-owned enterprises. and focus on the development of regional markets along the "Belt and Road Initiative" route, and scientifically promote the construction of overseas business and marketing outlets. Overseas business has expanded rapidly in the past three years, with revenue of 139 million yuan during the reporting period, an increase of 34.95% over the same period last year.
The price of copper has fallen steadily, and the scissors difference in gross profit margin has appeared. 80% of the cost composition of wire and cable copper prices in China have declined steadily over the past 18 years, and the company's gross profit margin has continued to rise month-on-quarter, and the gross profit margin has risen to 23.55% in the second quarter of 2019, showing a significant scissors differential. as copper prices continue to decline from July to August 2019, the company's gross profit margin is expected to further increase.
UHV cycle and rail transit, new energy high demeanor for the company to bring sustained growth momentum. In September 2018, the Energy Bureau proposed to speed up the construction of nine key power transmission and transformation projects, and the company continued to focus on breaking through the UHV cable market. will benefit from the new round of UHV construction cycle; in 2019, the General Railway working Conference proposed that the railway fixed investment should be maintained on an intensity scale to ensure the commissioning of 6800 km of new lines, and the demand of the domestic rail transit industry is expected to maintain a high level. Photovoltaic industry demand is expected to release in the second half of the year, wind power to maintain a high demeanor, will jointly drive the cable industry demand growth.
Investment suggestion: the company is a leading special power manufacturer in China, with obvious advantages in high-end markets such as nuclear power and rail transit, smooth overseas business expansion, and continuous layout of high-voltage cables, electric vehicle charging cables and other emerging fields. in the context of the continuous increase in industry demand, it is expected to maintain rapid growth. We expect the company's net profit from 2019 to 2021 to be 1.08 pesos, 175,240 million yuan, EPS 0.21, 0.34 and 0.46, respectively, and the PE corresponding to the closing price on August 5, 2019 is 44.0,27.2,19.9 times, covering for the first time and giving an overweight rating.
Risk hints: the macroeconomic risk is lower than expected, the market competition aggravates the risk, and the risk of rising raw material prices