Core viewpoints
After the divestiture of Longxin technology, the company's main business is expected to return to the right track of steady growth, the competitiveness of the rail transit plate of the company is strong, and the support for the subway is enhanced under counter-cyclical adjustment, the company is expected to fully benefit and maintain the company's "buy" rating.
The company's core performance is basically in line with expectations, removing the burden and returning to the growth track. In 2019, the company achieved a total revenue of 3.398 billion yuan, a decrease of 0.50% compared with the same period last year, realized a net profit of 650 million yuan, deducted a non-return net profit of 259 million yuan, and successfully reversed its losses. after considering the net profit loss of Longxin science and technology merger from January to October and the one-time profit generated by divestiture, the actual core profit of the company may be about 398 million yuan. During the reporting period, the company's comprehensive gross profit margin was 34.60%, an increase of 5.14pcts over the previous year's 29.46%. During the period, the net operating cash flow was 406 million yuan (- 330 million yuan for the whole of last year). Excluding the influence of Longxin technology, the operating income of the company's other business in 2019 was 3.355 billion yuan, an increase of 18.15% over the same period last year. The company's core main business still retained good competitiveness. The company had previously announced the sale of 100% stake in Longxin technology to the bail-out fund. The divestiture of Longxin technology was completed in October 2019. After experiencing fluctuations in cross-industry mergers and acquisitions, the company is expected to return to the right track of steady growth.
The main business order of rail transit is full, and the growth rate is guaranteed. By the end of 2019, the company had on-hand orders of 4.002 billion yuan, an increase of 7.96% over the same period last year. The annual income of the main business of rail transit was + 27.99% to 2.677 billion yuan compared with the same period last year, and the gross profit margin increased to 39.07%, reflecting the high prosperity of the derailment system. For the whole year, the company's vehicle door system output was + 33.39% to 74000 sets, while inventory was + 76.60% year-on-year, and stock preparation continued to increase. The market share of the company's city gate and EMU is more than 50%. With the introduction of Standard Motion and EMU, the company's market share continues to increase steadily, and mastering the mechanical and electrical core technology brings strong competitiveness. during the peak opening of railways and subways in 2020-2022, the company will fully benefit from its solid market share. In addition, the company set up a Guangzhou subsidiary in August 2019 to accelerate the development of maintenance business, new products such as gates and fans are also continuously promoted, and the company's growth in the rail transit plate has a high degree of certainty.
The business of new energy vehicles continues to advance. Affected by the decline of subsidies in 2019, the stagnation of new projects for downstream customers, the sharp decline in sales of wholesale projects, and the decline in the prices of some businesses, the company's new energy auto parts business fell 20.10% year-on-year. In the fluctuation of the industry boom, the company appointed 15 new projects throughout the year, obtained the qualifications of suppliers such as FAW-Volkswagen, Guangzhou Automobile Toyota, Lecker and other suppliers, and further increased the domestic market share of electric sliding doors for new energy buses. and realize the export business orders of the public transport market in Bulgaria, South Korea and other countries. Considering the recent warming of the national electric vehicle retreat policy, the company may face a better market environment in 2020.
Risk factors: the progress of domestic railway or subway construction is not as expected; the gross profit margin of the company's products is declining; the growth of new energy automobile parts or traditional automobile castings and forgings is not as expected.
Investment suggestion: after the divestiture of Longxin technology, the main industry is expected to return to the right track of steady growth, and the competitiveness of the rail transit plate of the company is strong, considering the strengthening of support for the subway under counter-cyclical adjustment, we slightly raise the company's 20-21 net profit forecast to 460 million million yuan (the original forecast is 40.45 billion yuan), and increase the 2022 net profit forecast of 630 million yuan, maintaining the company's "buy" rating.