Main points of investment
The company released a report for the third quarter of 2019: revenue in the first three quarters was 1.423 billion yuan, net profit of yoy+29.01%; was 95 million yuan, earnings per share of yoy+83.22%; was 0.18 yuan, gross profit of yoy+81.82%; was 21.20% yoymilk 2.51 pct, and net profit was 6.54% yoymilk 1.85 pct. In the third quarter, revenue was 515 million yuan, year-on-year + 18.22%, month-on-month + 8.79%; net profit was 32 million yuan, + 27.49% year-on-year,-26.87%; gross profit was 21.47%; 0.46pct; net profit was 5.99%; It is in line with market expectations as a whole.
Results recovered significantly, and gross profit margin and net profit margin continued to pick up. Since 2018, the company's revenue has returned to high growth, and its performance has turned from losses to profits. In the first three quarters of 2019, the company's revenue and performance continued to grow at a high rate of 29.01% and 83.22% respectively over the same period last year, and continued to maintain a strong recovery momentum. In the first three quarters of 2019, the company's gross profit margin rose to 21.20% year-on-year, net profit margin increased to 6.54% 1.85pct, and profitability has significantly rebounded to 2013 levels.
There are many blossoms in the downstream areas, and the winning bid amount has exceeded 600 million since the third quarter. Since the third quarter, the company has continuously won the big contract: on July 23, the company issued an announcement, winning the bid for "Baihetan Hydropower Station" and other seven projects, with a total bid amount of 223 million yuan; on August 28, the company issued an announcement, winning the bid for seven projects such as "Mechanical and Electrical Engineering of Hefei Rail Transit Line 4ram 5", with a total bid amount of 211 million yuan. On October 18, the company announced that it had won the bid for seven projects, including the "long'an 51MW Wind Farm Cable Project in Guangzhou Nuclear Industry", with a total bid amount of 210 million yuan. The above three announcements accounted for 14.17%, 13.43%, 13.33%, a total of 40.93% of the total revenue in 2018, covering nuclear power, construction, rail transit, iron and steel and other areas. The company has further strengthened its competitive advantage in traditional fields such as metallurgy, gradually established a leading position in the field of nuclear power, continued to expand its business share in emerging fields such as rail transit, and blossomed in various fields downstream, highlighting its core competitiveness.
The downward price of copper brings the gross margin scissors difference, and the ultra-high pressure cycle releases the growth driving force. Copper accounts for about 80% of the cost composition of wires and cables, and copper prices have shown a downward trend as a whole since 2018. The company's gross profit margin continues to rise month-on-quarter, showing a significant scissors gap; as copper prices continue to decline slightly in October 2019, the company's gross profit margin is expected to increase further. In September 2018, the Energy Administration proposed to speed up the construction of 9 key power transmission and transformation projects, covering 12 UHV construction projects. by the end of September 2019, four lines had been approved, and there were still four direct transmission lines waiting to start. The company continues to focus on breaking through the UHV cable market and will benefit from the incremental demand of the cable industry brought about by the new UHV construction cycle.
Investment suggestion: the company is a leading manufacturer of special power cables in China, with obvious advantages in high-end markets such as nuclear power and rail transit, and actively arranges new fields such as high-voltage cables and electric vehicle charging cables. We estimate that the company's net profit from 2019 to 2021 will be 1.13 sterling 1.75 / 236 million yuan, EPS 0.22, 0.34 and 0.45, respectively, and the PE corresponding to the closing price on October 21, 2019 will be 47.7, 30.9 and 22.9 times, respectively, maintaining 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