Main points of investment:
The revenue is growing rapidly, and the cost leads to a great decline in performance.
1) for the whole year, the company achieved revenue of 2.73 billion yuan, an increase of 11.91% over the same period last year, the corresponding sales of bead steel wire increased by 10.26%, and steel cord / hose steel wire increased by 35.55% and 12.61%, which achieved relatively rapid growth in the context of the decline in downstream automobile production and sale. the corresponding market share increased by 3.33 per cent and 1.14 per cent by 0.88 percentage points. In terms of product average price, bead steel wire / steel cord / rubber hose steel wire decreased by 5.57%, 2.70% and 6.27% compared with the same period last year, and product prices declined somewhat. The analysis is mainly caused by the decline in tire prices downstream to the upstream. The net profit of returning home for the whole year was 152 million yuan, down 25.87% from the same period last year, mainly due to the decline in product prices and the rapid increase in costs. Due to the increase in raw material prices and workers' wages, production costs increased by 16.97%. Sales / R & D / financial expenses increased by 20.91%, 32.42% and 14.46%. 2) the cash received from the sales of goods and services for the whole year was 2.195 billion yuan, accounting for 80.40% of the revenue, and the payback was good; the net operating cash flow for the whole year was 197 million yuan, down 38.82% from the same period last year. 4) the provision for bad debts of the company in the 2019 annual report is 19.9378 million yuan, there is no bad debt loss in the asset impairment loss in the current period, there is a bad debt loss of 8.5636 million yuan under the credit impairment loss, the overall risk of receivables is small, and the bad debt loss has a limited impact on the company's profits.
The company's steel cord products and overseas markets have become a growth point.
1) the bead wire business is expected to maintain steady and rapid growth, with a steady and small increase in market share. As the company increases the research and development of high-performance steel cord products and capacity expansion, while continuing to open up the middle and high-end tire market and customers, the steel cord business is expected to continue to grow rapidly and become a new sustainable growth point. 2) the growth of overseas revenue is significantly higher than that in China, and the proportion of overseas revenue continues to increase from 7.08% in 2015 to 16.03% in 2019. In the future, as the company increases the market development of international and domestic tire enterprises' overseas business, and relies on the cost-effective advantage to increase its overseas market share, the company's overseas revenue is expected to maintain rapid growth. 3) profitability is expected to improve. With the production of high-performance projects, the improvement of product structure and the appearance of scale effect, the gross profit margin of the company's steel cord and bead wire business is expected to continue to increase steadily. At the same time, as the export of high value-added products continues to grow, the export gross margin is expected to continue to rise in the future.
Profit forecast, maintain "overweight" rating
We estimate that the company's EPS in 2020-22 will be 1.00 yuan per share, corresponding to 2020-22 PE is 1.00 yuan per share, corresponding to 15-12-9 times, the company is the domestic bead steel wire leader, the future development of steel cord business is worth looking forward to, maintain the "increase" rating.
Risk tips: the automobile and tire industry is depressed and exceeds expectations; the impact of the global epidemic exceeds expectations; the company's market development is lower than expected; the risk of rising prices of raw materials; and the risk of exchange rate fluctuations.