Brief comment on performance
The company's 2019H1 revenue was 2.414 billion yuan, an increase of 21.88% over the same period last year, and its net profit was 95 million yuan, an increase of 45.04% over the same period last year. H1 revenue is in line with expectations and profits are growing faster than expected.
Business analysis
Seize the opportunity of "strong environmental protection" and "coal to gas" to maintain a steady increase in sales: the company's 2019H1 sold 451500 tons of various types of pipelines, up 18.54% from the same period last year, and the growth rate was further accelerated from 12.18% in 2018.
Adhere to the boutique line, the company's high-margin products have increased significantly: the company adheres to differentiation and boutique strategy to grasp the middle and high-end market. In the first half of the year, the company achieved a substantial increase in revenue from a number of products, especially high-margin products. The company's average gross margin has further increased to 14.48%, and the product structure has been continuously optimized.
Innovative marketing measures to cultivate new market growth points: the promotion of high-margin double-sided coating, painted pipes and other new products, of which the revenue of coated steel pipes increased by 549.79% over the same period last year. The company realized personalization in marketing service, distribution system and coordination, and the sales cost increased by 79.13%, contributing to a substantial increase in performance.
The National Pipe Network Company is about to be listed, which is expected to release greater pipe demand: after the National Pipe Network Company is listed in September, it will improve the speed of pipe network construction, and it is expected that the company will usher in better development opportunities in 2020.
The company's operating capacity and market strategy led to higher-than-expected profit growth: under the circumstances that the order volume of the National Pipe Network Company had not yet been released, and benefiting from the company's market and sales strategy, 2019H1's homing profit increased by 45.04%. So we raised the 2019 net profit from home by 5% to 250 million yuan.
Investment suggestion
It is estimated that the company's operating income from 2019 to 2021 will be 5.85 billion yuan, 7.07 billion yuan and 8.38 billion yuan, and the corresponding net profit will be 250 million yuan, 367 million yuan and 473 million yuan respectively, corresponding to EPS 0.48,0.71 and 0.91 respectively, and the corresponding PE will be times that of 14-10-8, with a "buy" rating.
Risk hint
The speed of pipeline construction is not up to expectations, the gross profit margin of the industry is down due to low-price competition, and the progress of the project is not up to expectations.
