Main points of investment
Event: the company announced its 2019 results, KuaiBao, its total operating income increased by 7.43% to 4.712 billion yuan, and its mother's net profit increased by 563.46% to 500 million yuan. In terms of Q4 alone, the income decreased 4.7% to 1.676 billion yuan, while the net profit returned to the mother increased by 3130.81% to 142 million yuan.
The epidemic has a certain impact on the production side in the short term, and the impact is controllable in 2020. After the epidemic, the company gradually prepared to resume work on February 10, and the front-line workers gradually returned to the factory from February 17. Up to now, the company's resumption rate has basically reached 100%. Compared with the starting date of the Lantern Festival in previous years, the loss of the construction period is about 7-10 days. In view of the special circumstances of the epidemic, the company has negotiated with customers on delaying the delivery date of existing orders, and customers understand the company's delivery delay, so existing orders will not be greatly affected. Overall, we believe that the epidemic may delay the company's shipments from the first quarter to the second quarter, but as the company gradually adjusts its production and procurement plans, it is expected to have little impact on orders and production in the first half and the whole year of 2020.
New areas, new categories, new customers gradually volume, the main business is expected to continue to repair. In 2019, under the background of Sino-US trade friction, the company adjusted its sales strategy in time and made a large investment in production, channel and management. as a result, new customers in the European market were opened up and sales revenue increased greatly. at the same time, North American orders exceeded the company's expectations, and the company will continue to expand the Southeast Asian and Australian markets. From the product category point of view, the company is expected to develop new categories on the basis of strong categories of leisure furniture, and combined with supporting sales, in-depth development of new markets. According to our estimation, the company's after-tax profit will be more than 350 million yuan in 2019. Under the guidance of the company's new strategy, with the gradual expansion of new regions, new categories and new customers, the company's performance will continue to repair clearly.
The return on stock investment is considerable, there are plenty of funds on the account, and employees are encouraged to improve management efficiency. The company through a fixed increase of 1.325 million shares of 603986.SH (Zhaoyi Innovation) shares, the target has risen significantly year-to-date, the stock investment is expected to make a certain contribution to the investment income at the end of the first quarter. Under the strategy of focusing on the main business, the company plans to adopt a strategy of gradual realization and contraction of investment in financial assets, and the company's monetary funds will be very abundant in the future. In order to improve shareholder returns, the company promised to pay cash dividends in 2019-2021. The dividend ratio is not less than 60%. According to our estimated 590 million performance expectations and 60% dividend ratio in fiscal year 2020, the company's dividend yield is 3.6%. In order to motivate employees and strengthen management, the company also plans to continue to motivate employees with excess profits.
Profit forecast and investment rating: with the smooth expansion of new markets and new customers, the company's main business repair is expected to continue to improve. We expect the company's homing net profit from 2019 to 2021 to increase by 563.5% 25.0% RMB21.6% to 500 million / 625 million / 759 million yuan respectively, corresponding to 21X/17X/14X, respectively. Considering that the company is a typical low valuation, growth and high dividend target, maintain the "buy" rating!
Risk hint: great changes have taken place in the international trade environment, the progress of production expansion in Henan is not as expected, and the exchange rate fluctuates sharply.