From January to September 2019, the company's performance increased significantly compared with the same period last year. EPS 0.34 yuan the company's operating income from January to September 2019 was 440 million yuan, an increase of 254.6%. The net profit was 95.19 million yuan, a substantial increase over the same period last year, EPS 0.34 yuan. In the third quarter alone, the company's revenue was 170 million yuan, a substantial increase over the same period last year, with a net profit of 24.65 million yuan, turning losses into profits and EPS 0.09 yuan.

Profitability has improved significantly, and the cost rate has dropped significantly.

During the reporting period, the company's comprehensive gross profit margin was 30.3%, up 3.8 percentage points from the same period last year; sales rates, management rates and financial rates were 4.0%, 8.5% and 0.5% respectively, with year-on-year changes of-9.4%,-21.0% and 1.2%, and period rates of 13.0%, down 29.4% from the same period last year.

In the third quarter, the company's comprehensive gross profit margin was 31.6%, down 1.3 percentage points from the same period last year; sales rates, management rates and financial rates were 4.3%, 7.2% and 0.5% respectively, with year-on-year changes of-20.6%,-34.0% and 1.3%, and period rates of 11.9%, down 53.3% from a year earlier.

With the start of urban rail transit construction and municipal construction, the demand for facade enamel steel plate is growing rapidly, the deep environmental protection of the power industry is tackled, the comprehensive management of the non-electricity industry is carried out, the demand for industrial protection enamel is improving, and the order volume of the company continues to rise. the total amount of major contracts (over 30 million) that have not yet been implemented in the first three quarters totaled 396 million yuan, sales increased, and fixed costs per unit product decreased. The profit level of the company has improved significantly, in addition, the investment income of foreign equity participation has reached 47.31 million yuan, and the performance has been turned from deficit to profit.

Profit Forecast and Investment rating

The Kaier new material facade decoration enamel business benefits from the restart of domestic infrastructure, the rapid growth of demand and the enhancement of the influence of superimposed brands, resulting in a significant increase in orders; industrial protection enamel business with the recovery of the environmental protection market, superimposed transformation of the overall engineering service providers and R & D bring business expansion and contribute new increments.

We maintain the company's 19-21 profit forecast EPS 0.48,0.80,0.92 yuan, maintain the target price of 12.00 yuan corresponding to the 19-year 25 times PE valuation level, maintain the "overweight" rating.

Risk Tips:

Macroeconomic downturn, lower-than-expected demand and rising prices of raw materials.