Incidents:
Recently, the company announced a revised performance announcement for the third quarter. The company expects to achieve net profit of 50 million yuan to 56 million yuan in the first three quarters of 2019, an increase of about 265%-308% over the previous year. Based on our recent tracking of the company and industry, the comments are as follows.
Commentary:
The company is a leading enterprise in the refrigeration equipment field and is actively expanding fuel cell-related business. Snowman Co., Ltd. specializes in four major businesses. ① The traditional refrigeration business. The company's refrigeration equipment has formed a stable market share, mainly used in concrete cooling, cold chain logistics, nuclear power, supermarkets and other fields. ② Compressor and system application business. The company masters core compressor technology and has two internationally renowned brands, SRM and Recomp. The company has leading technology, mainly used in industrial refrigeration, commercial refrigeration, snow and ice sports, and new energy. ③ Oil and gas service business. Jiayun Oil & Gas, a wholly-owned subsidiary of the company, is the first professional company in China engaged in the operation and maintenance of production plants such as natural gas collection and purification. It has a CNPC first-class material supplier license. Its customers cover major natural gas fields such as the Tarim Basin and the Sichuan Basin. ④ In the field of new energy, the company is actively deployed, integrating core technologies and international brands in the hydrogen energy industry chain in Sweden and Japan through wholly-owned mergers, acquisitions and shareholding. Currently, its main products cover fuel cell air compressors, hydrogen circulation pumps, hydroelectric hydrogen production equipment, hydrogen fueling station construction and complete equipment.
Performance is still under pressure in the short term, and the company is actively transforming and increasing its fuel cell industry chain business. The company expects to achieve net profit of 50 million yuan to 56 million yuan in the first three quarters of 2019, an increase of 265%-308% over the previous year. The main reason for the increase in performance was ① the Hegeely M&A Fund contributed about 70 million yuan in net profit to the company; ② the company added about 19.5 million yuan in credit impairment losses in the third quarter; ③ the expansion of new businesses such as hydrogen energy, which led to an increase in related costs and expenses. Overall, short-term pressure remains. Active transformation. In 2019, the company signed a cooperation agreement with Chongqing's Liangjiang New District for the “Fuel Cell Engine and Core Components Manufacturing Project”. The hydrogen-air proton exchange membrane fuel cell system produced and developed was applied to the Xiamen Jinlong 8.5m fuel cell city bus. This model was selected for the “Road Motor Vehicle Manufacturer and Product Notice” issued by the Ministry of Industry and Information Technology on June 11, 2019. At present, the company has supplied hydrogen fuel cell engines to automakers such as Jinlong and Jinlu, and supplied 21 companies including Yutong Bus and Dongfeng Motor with air compressors, which are the core components of hydrogen fuel vehicles.
There is plenty of room for development in the fuel cell industry, and the future can be expected. Hydrogen energy has characteristics such as safety, efficiency, and cleanliness. With continuous breakthroughs in technology, costs have gradually declined. At present, it has gradually entered the commercial operation stage. From a global perspective, fuel cells have now achieved technological breakthroughs in transportation, power generation, military, etc., and core components such as the cost, power, and durability of electric reactors have reached the level of commercial application. China's hydrogen energy has great potential for development. Currently, technology has been gradually stored in hydrogen production, hydrogen storage, transportation, etc., and core components such as membrane electrodes, bipolar plates, and electric reactors have basically been localized. The company has established long-term cooperation with universities and research institutes at home and abroad, such as the Chinese Academy of Sciences, the Swedish SRM Company, and the US CN Company, to develop hydrogen fuel cell air compressors, hydrogen circulation pumps, etc. The company's mid-term goal is to transform from a compressor manufacturer to an operation service provider. The long-term goal is to establish carbon-free, high-efficiency hydrogen energy projects and core equipment development and supply. Through a series of mergers and acquisitions, holding or participation methods, advanced international technologies in the fields of hydrogen energy and fuel cells have been introduced to form a master of upstream “water electrolysis hydrogen production, hydrogenation, and hydrogen liquefaction technology”, covering the complete industrial chain of “fuel cells, air supply systems, hydrogen circulation pumps” downstream, and developing collaboratively with other businesses.
Investment advice: Give a “neutral” rating. The company's 2019 and 2020 EPS are expected to be 0.09 yuan and 0.15 yuan respectively, corresponding to 59 times the PE in 2020. The company's short-term performance is under pressure, making it difficult to digest current valuations. The company is actively transforming. There is plenty of room for growth on its track, but it still requires time to verify, so the company was given a “neutral” rating.
Risk warning: customer development falls short of expectations; fuel cell industry development falls short of expectations