Performance preview
Forecast 2019 net profit compared with the same period last year-14% focus 1Q20 loss of 2900-3800 million yuan 2019 performance KuaiBao: income 3.55 billion yuan, year-on-year + 9%; net profit attributed to the parent company 128 million yuan, year-on-year-14%. Corresponding to the 4Q19 income of 1.04 billion yuan, + 5% year-on-year; the net profit attributed to the parent company is 20 million yuan,-43% year-on-year. The company's performance in 2019 is lower than our expectations, mainly due to more investment in sales expenses.
1Q20 performance forecast loss of 2900-38 million yuan, mainly affected by the epidemic, the company and the upstream and downstream industrial chain to resume work delay, logistics is not smooth, resulting in a reduction in sales, orders delayed, in the case of a decline in income, a temporary loss, in line with our expectations.
Pay attention to the main points
Hubei subsidiary is greatly affected by the epidemic, which is a drag on the company's domestic sales business: 1) Hubei Ershida Electric Appliance Co., Ltd. is located in the worst-hit area of the epidemic in Anlu, Hubei, and 1Q20 is negatively affected by the epidemic. The subsidiary accounts for about 20% of the company's annual revenue, and its products are mainly supplied for domestic sales of cooking utensils, resulting in a large decline in the company's domestic sales revenue in the first quarter. 2) affected by the production capacity in Hubei, the sales of 1Q20 Estelle's flagship kitchenware stores were-45% compared with the same period last year (Amoy data), while the 1Q20 sales of the cooking utensils industry were + 25% year-on-year, and the company failed to benefit from the rise of the "home economy" and the transfer of demand online during the epidemic. 3) the export business of 2Q20 faces the risk of overseas epidemic. At present, the export order is delayed, but there is no cancellation. We expect 2Q20's export business to face downward pressure.
The cost investment increased in 2019: 1) the company's return net interest rate in 2019 was 3.6%, a decrease of 1.0ppt compared with the same period last year, mainly due to the continuous increase in sales expenses and R & D investment. 2) in 2019, the company's sales expenses increased by about 100 million yuan compared with the same period last year, and the sales expense rate increased by about 1% compared with the same period last year. However, in the period of poor demand in 2019, the effect of marketing expenditure investment is not obvious.
Valuation and suggestion
In 2019, we raised the sales expense forecast and lowered the company's EPS forecast by 12% to 0.37 yuan. taking into account the impact of the spread of overseas epidemics, we lowered our EPS forecast by 20% to 0.80 yuan in 2020 and maintained the EPS forecast in 2021 by 0.48 yuan. Maintain the neutral rating and target price of 9.00 yuan, corresponding to 11x/19x 200.21e Pmax E, with an increase of 8%. The company's current share price corresponds to 10x/17x 2020amp 21e Pmax E.
Risk
The development of the epidemic exceeded expectations; the risk of demand decline in the domestic market.