Event: Shangwei released its three-quarter report in 2019, with revenue of 1.423 billion yuan in the first three quarters, an increase of 29.01% over the same period last year, net profit of 95 million yuan, an increase of 83.22%, basic earnings per share of 0.18 yuan per share, an increase of 80% over the same period last year, and a weighted average return on net assets of 6.49%, an increase of 2.91pcts over the same period last year. In addition, the company expects to achieve a 70% increase in net profit for the whole year.
The company operated steadily and Q3 performance grew steadily: Q3 achieved revenue of 515 million yuan in the single quarter, an increase of 18.22% over the same period last year; net profit of 32 million yuan, an increase of 27.49% over the same period last year; comprehensive gross profit of 21.47%, an increase of 0.46 pct over the same period last year; and three rates of 10.83%, a slight increase of 0.16pcts over the same period last year, but slightly decreased 0.09pcts from the previous month, and remained stable as a whole. In addition, in recent years, the company has continued to improve the management of accounts receivable, strengthening the management of accounts receivable in advance, during and after the event, so as to reduce the risk of accounts receivable recovery. The risk prevention and control level of the company's accounts receivable has been significantly improved in the first three quarters. When the income increased by 29.01%, the accounts receivable increased by only 132 million yuan in the first three quarters, far lower than the 332 million yuan in the same period last year.
Frequent winning bids will ensure sustained growth in future performance: since the third quarter, the company and its wholly-owned subsidiary Shangwei have frequently won bids in the fields of nuclear power, wind power, chemical industry, power, construction, rail transit and iron and steel. On July 23, the company disclosed that the winning amount was 223 million yuan, 211 million yuan on August 28, 210 million yuan on October 18, and 645 million yuan in Q3 in a single quarter. Accounted for 41% of revenue in 2018. The company's frequent bid winners are mainly due to the continuous consolidation and strengthening of the company's competitive advantages in steel smelting, petrochemical, electrical equipment and other traditional advantage areas, and the continuous improvement of service level and market share. At the same time, in the first half of the year, the company made important breakthroughs in rail transit, nuclear power, new energy, overseas Belt and Road Initiative and other aspects, and the company's special cables and ordinary cables have been recognized in many market fields. Frequent winning bids and sufficient orders on hand will ensure the continued growth of the company's future performance.
Investment suggestion: the company's revenue from 2019 to 2021 is expected to be 21.3 million RMB 2.91 billion, with a growth rate of 35%, 37%, 36%, 0.22, 0.29, 0.39 and 35%, respectively, respectively, and a growth rate of 95%, 33%, 35%, respectively, with a 6-month target price of 11.6 yuan.
Risk tips: intensified competition has led to a sharp decline in gross profit margins and a sharp rise in the prices of major raw materials such as copper.