Event: the company released a semi-annual report that in the first half of 2019, the operating income was 1.268 billion yuan, down 13.15% from the same period last year; the net profit was 43 million yuan, up 2.57% from the same period last year; and the net profit after deducting non-return was 39 million yuan, up 0.2% from the same period last year.
The business of automobile steel wheels has grown steadily, and remarkable achievements have been made in the strategy of transformation and upgrading. In the first half of the year, the company continues to be optimistic about the prospect of "high-strength steel-lightweight" and makes in-depth innovation in the research and development, product design and manufacture of new high-strength steel materials. During the reporting period, the company's automobile steel wheel business operating income was 573 million yuan, an increase of 16.52% over the same period last year, business gross profit margin increased by 2.76% over the same period last year, and profitability improved.
Tubeless steel wheels are the main source of business income, accounting for 34.06% of revenue and 16.99% of gross profit margin. Benefiting from the lightweight trend of the industry, the market capacity of forged aluminum alloy wheels is large, the company has completed the R & D and testing of more than ten varieties of forged aluminum rings in the first half of the year, and the approval of non-public projects will also contribute to the upgrading of the company's wheel products, and its future development can be expected.
Steel structure business revenue decline under external influence, actively respond to the development of high-end product market. Due to Sino-US trade frictions and the domestic economic downturn, the volume and scale of the company's steel structure business orders fell sharply compared with the same period last year. In addition to imposing tariffs on Chinese steel and aluminum products, the United States has also launched an anti-dumping investigation into Chinese steel structure products exported to the United States, which led to a reduction in overseas steel structure orders in the first half of the year and intensified competition in the domestic market. In the first half of the year, the company's steel structure business achieved operating income of 598 million yuan, down 31.18% from the same period last year. What is worth paying attention to is that the company takes the initiative to lay out overseas production bases such as Vietnam and actively seek countermeasures to reduce the impact on the operation. At the same time, the company ploughs the domestic steel structure market, continues to firmly develop medium and high-end steel structure products, and consolidates good cooperative relations with many large-scale EPC at home and abroad.
The synergy effect of the joint venture company appears, and the product chain is constantly improved. For the steel structure business, the company has invested in metal curtain wall composite panels and steel grid panels based on the new Changcheng business through joint venture and holding cooperation. At present, the joint venture company has undertaken a number of engineering projects, the market recognition has been gradually improved, and the synergy effect has appeared, which has further improved the supply chain integration business of steel structure products and promoted the company to turn to green building industrialization integration system provider. The gross profit margin of the company's corresponding steel structure engineering products is 12.85%, an increase of 2.25% over the same period last year. At the same time, the company continues to layout the automotive aftermarket strategy through a joint venture, and gradually realizes the transition from a single wheel rim supplier to a wheel management service provider by the combination of platform service management and hardware provision. Recently, the automotive industry has picked up rapidly. As a leading automotive steel wheel manufacturer in China, the company's future performance growth is worth looking forward to.
Investment suggestion: as the leading automobile steel wheel manufacturer in China, with the gradual recovery of the industry, the future performance growth is worth looking forward to. We expect the company's 19-year / 20-year revenue to be 2.93 billion yuan / 3.03 billion yuan respectively. The net profit is 85 million yuan / 99 million respectively, maintaining the "buy" rating.
Risk hint: the sales volume of the automobile industry is lower than expected, and the cost reduction of spare parts is greater than expected.