The growth rate slowed down in the third quarter, and the operating pressure increased: according to the company's third-quarter report, the operating income in the first three quarters was 4.526 billion yuan, an increase of 11.92% over the same period last year, and the net profit returned to the mother reached 361 million yuan, an increase of 38.85% over the same period last year. The net profit belonging to shareholders of listed companies in the first half of the year was 284 million yuan, up 100.44% from the same period last year. Q3's operating income in a single quarter increased by 10.84% over the same period last year, while its net profit decreased by 34.81% compared with the same period last year. In the first three quarters, monetary funds decreased by 35.47% compared with the beginning of the period, due to the purchase of structural deposits. The advance payment increased by 64.43% over the beginning of the year, and the inventory decreased by 10.24% compared with the beginning of the year. Fierce competition in the elevator market, rising steel prices and increased management costs have led to a decline in profitability and performance growth, which is not as good as the performance in the first half of the year.
With the intensification of competition, the company continues to increase its market share: the company is mainly engaged in elevator machine sales, maintenance, elevator parts, etc., thanks to the huge profits of its subsidiary Hitachi Elevator, Hitachi accounted for the first place in the Chinese elevator market in 2018. Its parent company contributed 238 million yuan in investment income in the first half of this year. The industry association predicts that elevator shipments will grow by 10% in 2019, and the elevator market demand will further increase under the catalysis of the old elevator policy. With the intensification of market competition and the elimination of small manufacturers, some potential market space will be released, and the company is expected to further increase its market share. In addition, as a consortium of main bidders, the company has become the first candidate for the Guangzhou track escalator project. The total tender control price of the project reached 6.053 billion yuan, and the company's bid price was close to 5.5 billion yuan, which exceeded last year's business income.
Diversified layout, expand profitable business potential: the company is strategically oriented to expand intelligent manufacturing equipment and services, while doing a good job in the elevator core industry, the company continues to diversify and expand, including intelligent parking equipment, screen doors, LED, rail transit operation and maintenance, industrial Internet and other businesses. Songxing Electric actively seeks to reach new business cooperation with the railway system, and its independently developed EMU underside inspection robot system has passed the final technical evaluation of the China Railway Corporation, and is currently in trial operation in a number of domestic high-speed rail systems.
At present, the sales ratio of the company's straight ladder to the escalator is 9:1, and the rapid development of the rail transit market gives more room for the development of the escalator business. In addition, due to the investment and management adjustment of Sini Electric, the relevant operating qualifications have changed, and the company has terminated the acquisition of 65% of the shares of Sini Electric. In October, the company announced that it applied for arbitration compensation, involving 23.66 million yuan in performance compensation for the merger and acquisition of Songxing Electric, which is still in the acceptance stage.
Investment suggestion: we predict that the EPS of the company from 2019 to 2021 is 0.57,0.63 and 0.66 yuan respectively, and the corresponding PE is 13 times, 12 times and 11 times respectively. Maintain the recommended rating.
Risk tips: old building reconstruction market is not as expected; industry competition intensifies; steel prices rise and so on.