2019Q1~Q3 performance is lower than we expected.
Haining Picheng announced its results for the first three quarters of 2019: total operating income was 1.051 billion yuan, down 7% from the same period last year; net profit from home was 243 million yuan, down 18.3% from the same period last year, corresponding to earnings per share of 0.19 yuan, which was lower than we expected, mainly due to declining revenue and higher fees. From a quarterly point of view, 2019Q1/Q2/Q3 revenue is-15.1% compared with the same period last year, respectively. The net profit is-14.9%, 7.5%, 43.8%, respectively.
Trend of development
1. The total revenue in the first three quarters is-7% compared with the same period last year, and the main business of property leasing is still under pressure. In the first three quarters, the company's total revenue decreased by 7% compared with the same period last year. We expect that the performance of the company's main property leasing business will still be under pressure due to the continued decline in the physical professional market. At the same time, the business scope of the subsidiary Import and Export Company has been adjusted, and the business volume has been greatly reduced compared with the same period last year. It is also a drag on revenue performance. During the reporting period, the company continued to promote the development of the second main business health industry and optimize the business layout, but we expect short-term performance to remain under pressure due to the impact of the macro environment.
2. Profitability has declined. Gross profit margin in the first three quarters increased by 6.2ppt to 55.1% compared with the same period last year, which we expect to be related to changes in the income structure. From the expense point of view, affected by the decline in revenue, the expense rate is facing upward pressure. During the third quarter, the expense rate increased by 10.7ppt over the same period last year. Among them, the sales expense rate increased by 4.7ppt in the third quarter, and the management and R & D expense rate increased by 2.9 ppt. At the same time, due to the issuance of bonds and the acquisition of loans, the increase in interest expenses in the third quarter also led to an increase in the financial expense rate. 3ppt. In addition, the decrease in other income from the same period last year and the provision of credit impairment losses for the current period also weighed on the performance. Finally, the net profit margin in the first three quarters fell 3.2ppt to 23.1% compared with the same period last year, and the net profit margin in the third quarter alone fell 6.9ppt to 13.4% year-on-year.
3. Pay attention to the follow-up development of fashion and health industry. In the face of the overall downward pressure of the macro environment, the company actively promotes the transformation and upgrading of its business, extending the development of the fashion industry from the main leather industry; at the same time, the company actively promotes the layout of the health industry of the second main industry. Haining Picheng Rehabilitation Hospital, Haining second Hospital and other medical institutions have been laid out. Follow up to pay attention to the improvement trend of the company's main business and the development of fashion and health industry.
Profit forecast and valuation
Based on the downward pressure of the company's main business, the profit forecast for 2019-20 will be reduced by 7% to 0.260.28 yuan per share. The current share price corresponds to 2019, 2020, 16, 15, and 15 times the price of Pamp E. Maintain the outperform industry rating, but based on earnings forecast adjustments, cut the target price by 9% to 5.45 yuan, corresponding to 2019 Univer in 2020 21 times Pmax E, which has 26.2% room to rise from the current share price.
Risk.
The prosperity of leather consumption is declining; the progress of attracting investment in fashion towns is not as expected.