In 2019, the company's homing profit fell 14.9% from the same period last year, in line with expectations. Q1 elevator production, installation and delivery may be affected by the COVID-19 epidemic. In early April, Shanghai Mitsubishi launched a 41st campaign to ensure the achievement of the 2020 target. Steady price increases and lower costs in 2020 are expected to lead to a rebound in the company's performance. Medium-and long-term policies encourage the renovation of old ladders and the addition of old buildings, and it is expected that the demand of China's elevator industry will continue to pick up after the epidemic. It is estimated that the company's parent net profit from 2020 to 2022 is 13.12,15.02 (- 2.21) and 1.678 billion yuan, respectively. The current valuation of the company is much lower than that of international comparable companies and about 5.3 billion yuan in paper cash, maintaining a "highly recommended" rating.
The performance in 2019 is in line with expectations, Q4 gross profit margin is higher than the previous month, and the growth is expected in 2020.
In 2019, the company's revenue was 22.1 billion yuan, up 4.16% from the same period last year, the overall gross profit margin was 16.5%, down 2.6% from the same period last year, and the net profit was 1.08 billion yuan, down 14.9% from the same period last year, in line with expectations. In 2019, the company's expense rate during the period was 8.74%, an increase of about 0.24% over the same period last year, mainly due to a decrease in interest income from the use of funds. 2019Q4's gross profit margin was 16.39%, reversing seven consecutive quarters of decline, and 0.12 percentage points higher than 2019Q3. At the beginning of April 2020, Mitsubishi elevator has been in full production, and launched 41st action to ensure the completion of the 2020 target, and the mechanical and electrical performance of Shanghai is expected to increase in 2020.
The transformation of old ladders and the addition of old buildings have become a new driving force for the growth of the industry. Shanghai Mitsubishi has the advantage of scale.
By the end of 2019, the number of elevators in China was close to 7 million, and the cumulative sales of Shanghai Mitsubishi exceeded 900000, ranking first in the industry. The number of old ladders that have been in operation for more than 15 years is increasing year by year, and the demand for the renovation of old ladders is being released rapidly. in 2019, the number of old elevators in Shanghai Mitsubishi increased by more than 50% compared with the same period last year. In 2019, the Ministry of Housing and Construction and other ministries and local governments issued an incentive policy for adding ladders for old buildings. In 2019, Shanghai Mitsubishi completed about 4000 additional ladders for old buildings, an increase of more than 30% over the same period last year. In March 2020, Shanghai Mitsubishi was ranked as the top 500 supplier of real estate development in 2020 with a first selection rate of 19%, and ranked first for 10 years in a row. We believe that in 2020, Shanghai Mitsubishi is expected to make new breakthroughs in the sales of new ladders, the renovation of old ladders and the addition of old buildings by virtue of the advantage of scale.
Q1 may be slightly affected by COVID-19 's epidemic, but the increase in volume and price is expected to promote a rebound in performance in 2020.
The lower reaches of elevator sales, installation and maintenance services are mostly residents' living areas, so the COVID-19 epidemic will affect elevator production, delivery and demand may be delayed. China's elevator production fell by 36.2% from January to February 2020 compared with the same period last year. We believe that the decline in company profits in 2018-2019 is mainly due to the weak price increase in elevator business in 2017-2018. According to the data of Kone Group, the price of newly sold elevators in China has been quite stable since 2019Q1. Combined with the product delivery cycle, we believe that Shanghai Mitsubishi has entered a stable phase of volume increase and price increase in 2020. It is expected that the sales of new ladders for the whole year will be about 98000 units, an increase of about 11% over the same period last year. At the same time, the decline in cost will promote the recovery of gross profit margin of elevator business.
Risk tips: lengthening the cycle of real estate and infrastructure construction; risk of credit impairment of accounts receivable